(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) |
☒ | Accelerated filer | ☐ | ||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
Emerging growth company |
TABLE OF CONTENTS | Page | |||||||
PART II | ||||||||
FINANCIAL STATEMENTS |
PART I |
thousands except par values and share amounts | September 30, 2023 | December 31, 2022 | |||||||||
ASSETS | |||||||||||
Master Planned Communities assets | $ | $ | |||||||||
Buildings and equipment | |||||||||||
Less: accumulated depreciation | ( | ( | |||||||||
Land | |||||||||||
Developments | |||||||||||
Net investment in real estate | |||||||||||
Investments in unconsolidated ventures | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Municipal Utility District receivables, net | |||||||||||
Deferred expenses, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Other assets, net | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES | |||||||||||
Mortgages, notes, and loans payable, net | $ | $ | |||||||||
Operating lease obligations | |||||||||||
Deferred tax liabilities, net | |||||||||||
Accounts payable and other liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (see Note 9) | |||||||||||
EQUITY | |||||||||||
Preferred stock: | |||||||||||
Common stock: | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings (accumulated deficit) attributable to Howard Hughes Holdings Inc. | ( | ||||||||||
Accumulated other comprehensive income (loss) | |||||||||||
Treasury stock, at cost, | ( | ||||||||||
Total equity attributable to Howard Hughes Holdings Inc. | |||||||||||
Noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
FINANCIAL STATEMENTS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
REVENUES | |||||||||||||||||||||||
Condominium rights and unit sales | $ | $ | $ | $ | |||||||||||||||||||
Master Planned Communities land sales | |||||||||||||||||||||||
Rental revenue | |||||||||||||||||||||||
Other land, rental, and property revenues | |||||||||||||||||||||||
Builder price participation | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
EXPENSES | |||||||||||||||||||||||
Condominium rights and unit cost of sales | |||||||||||||||||||||||
Master Planned Communities cost of sales | |||||||||||||||||||||||
Operating costs | |||||||||||||||||||||||
Rental property real estate taxes | |||||||||||||||||||||||
Provision for (recovery of) doubtful accounts | ( | ||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
Total expenses | |||||||||||||||||||||||
OTHER | |||||||||||||||||||||||
Provision for impairment | ( | ( | |||||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | |||||||||||||||||||||||
Other income (loss), net | |||||||||||||||||||||||
Total other | ( | ( | |||||||||||||||||||||
Operating income (loss) | ( | ( | |||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Gain (loss) on extinguishment of debt | ( | ( | ( | ||||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | ( | ( | |||||||||||||||||||||
Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
Income tax expense (benefit) | ( | ( | |||||||||||||||||||||
Net income (loss) | ( | ( | |||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Net income (loss) attributable to Howard Hughes Holdings Inc. | $ | ( | $ | $ | ( | $ |
FINANCIAL STATEMENTS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||
Interest rate caps and swaps (a) | ( | ( | |||||||||||||||||||||
Reclassification of the Company's share of previously deferred derivative gains to net income (b) | ( | ||||||||||||||||||||||
Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive income (loss) | ( | ( | |||||||||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | ( | ( | |||||||||||||||||||||
Comprehensive income (loss) attributable to Howard Hughes Holdings Inc. | $ | ( | $ | $ | ( | $ |
FINANCIAL STATEMENTS |
Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||
Common Stock | Treasury Stock | |||||||||||||||||||||||||||||||
thousands except shares | Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Net income (loss) | — | — | — | ( | — | — | — | ( | ( | |||||||||||||||||||||||
Interest rate swaps, net of tax expense (benefit) of $( | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
Teravalis noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Stock plan activity | — | — | — | ( | ( | — | ||||||||||||||||||||||||||
Stock conversion to HHH | ( | ( | ( | — | — | — | — | |||||||||||||||||||||||||
HHC shares issued to HHH | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Capital transactions with HHH | — | — | ( | — | — | — | — | |||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | |||||||||||||||||||||||||
Interest rate swaps, net of tax expense (benefit) of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Teravalis noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of common shares | — | — | — | — | — | ( | ( | ( | — | ( | ||||||||||||||||||||||
Stock plan activity | — | — | — | ( | ( | — | ||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||
Net income (loss) | — | — | — | ( | — | — | — | ( | ( | |||||||||||||||||||||||
Interest rate swaps, net of tax expense (benefit) of $( | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
Teravalis noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Stock plan activity | — | — | ( | ( | — | |||||||||||||||||||||||||||
Stock conversion to HHH | ( | ( | ( | — | — | — | — | |||||||||||||||||||||||||
HHC shares issued to HHH | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Capital transactions with HHH | — | — | ( | — | — | — | — | |||||||||||||||||||||||||
Other | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | ( | $ | $ | $ | $ | $ | |||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | |||||||||||||||||||||||||
Interest rate swaps, net of tax expense (benefit) of $ | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Deconsolidation of Ward Village homeowners’ associations | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||
Teravalis noncontrolling interest | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Reclassification of the Company’s share of previously deferred derivative gains, net of tax expense of $ | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||
Repurchase of common shares | — | — | — | — | — | ( | ( | ( | — | ( | ||||||||||||||||||||||
Stock plan activity | — | — | ( | ( | — | |||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ |
FINANCIAL STATEMENTS |
Nine Months Ended September 30, | |||||||||||
thousands | 2023 | 2022 | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | ( | $ | ||||||||
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: | |||||||||||
Depreciation | |||||||||||
Amortization | |||||||||||
Amortization of deferred financing costs | |||||||||||
Amortization of intangibles other than in-place leases | |||||||||||
Straight-line rent amortization | ( | ( | |||||||||
Deferred income taxes | ( | ||||||||||
Restricted stock and stock option amortization | |||||||||||
Net gain on sale of properties | ( | ( | |||||||||
Net gain on sale of unconsolidated ventures | ( | ||||||||||
(Gain) loss on extinguishment of debt | |||||||||||
Impairment charges | |||||||||||
Equity in (earnings) losses from unconsolidated ventures, net of distributions and impairment charges | ( | ||||||||||
Provision for doubtful accounts | ( | ||||||||||
Master Planned Community development expenditures | ( | ( | |||||||||
Master Planned Community cost of sales | |||||||||||
Condominium development expenditures | ( | ( | |||||||||
Condominium rights and units cost of sales | |||||||||||
Other | |||||||||||
Net Changes: | |||||||||||
Accounts receivable, net | ( | ||||||||||
Other assets, net | ( | ( | |||||||||
Condominium deposits received, net | |||||||||||
Deferred expenses | ( | ( | |||||||||
Accounts payable and other liabilities | ( | ( | |||||||||
Cash provided by (used in) operating activities | ( | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Property and equipment expenditures | ( | ( | |||||||||
Operating property improvements | ( | ( | |||||||||
Property development and redevelopment | ( | ( | |||||||||
Acquisition of assets | ( | ||||||||||
Proceeds from sales of properties, net | |||||||||||
Reimbursements under tax increment financings | |||||||||||
Distributions from unconsolidated ventures | |||||||||||
Investments in unconsolidated ventures, net | ( | ( | |||||||||
Cash provided by (used in) investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from mortgages, notes, and loans payable | |||||||||||
Principal payments on mortgages, notes, and loans payable | ( | ( | |||||||||
Repurchases of common shares | ( | ||||||||||
Debt extinguishment costs | ( | ||||||||||
Special Improvement District bond funds released from (held in) escrow | |||||||||||
Deferred financing costs and bond issuance costs, net | ( | ( | |||||||||
Taxes paid on stock options exercised and restricted stock vested | ( | ( | |||||||||
Stock options exercised | |||||||||||
Issuance of Teravalis noncontrolling interest | |||||||||||
Distribution to noncontrolling interest upon sale of 110 North Wacker | ( | ||||||||||
Contributions from Teravalis noncontrolling interest owner | |||||||||||
Cash provided by (used in) financing activities | ( | ||||||||||
Net change in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash at beginning of period | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ |
FINANCIAL STATEMENTS |
Nine Months Ended September 30, | |||||||||||
thousands | 2023 | 2022 | |||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||||||||||
Interest paid, net | $ | $ | |||||||||
Interest capitalized | |||||||||||
Income taxes paid (refunded), net | |||||||||||
NON-CASH TRANSACTIONS | |||||||||||
Issuance of Teravalis noncontrolling interest | $ | $ | |||||||||
MPC land contributed to real unconsolidated ventures | |||||||||||
Accrued property improvements, developments, and redevelopments | ( | ||||||||||
Non-cash proceeds from sale of properties | |||||||||||
Special Improvement District bond transfers associated with land sales | |||||||||||
Capitalized stock compensation | |||||||||||
Initial recognition of operating lease right-of-use asset, net | |||||||||||
Initial recognition of operating lease obligation | |||||||||||
FINANCIAL STATEMENTS FOOTNOTES |
1. Presentation of Financial Statements and Significant Accounting Policies |
FINANCIAL STATEMENTS FOOTNOTES |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Straight-line rent receivables | $ | $ | |||||||||
Tenant receivables | |||||||||||
Other receivables | |||||||||||
Accounts receivable, net (a) | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
thousands | Income Statement Location | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||
ASC 842 reserve | Rental revenue | $ | $ | $ | $ | ( | ||||||||||||||||||||
ASC 450 reserve | Provision for (recovery of) doubtful accounts | ( | ||||||||||||||||||||||||
Total (income) expense impact | $ | $ | $ | $ | ( |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
2. Investments in Unconsolidated Ventures |
Ownership Interest (a) | Carrying Value | Share of Earnings/Dividends | |||||||||||||||||||||||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||
thousands except percentages | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||
Equity Method Investments | |||||||||||||||||||||||||||||||||||||||||
Operating Assets: | |||||||||||||||||||||||||||||||||||||||||
110 North Wacker | % | % | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
The Metropolitan Downtown Columbia (b) | % | % | |||||||||||||||||||||||||||||||||||||||
Stewart Title of Montgomery County, TX | % | % | |||||||||||||||||||||||||||||||||||||||
Woodlands Sarofim #1 | % | % | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
m.flats/TEN.M (c) | % | % | |||||||||||||||||||||||||||||||||||||||
Master Planned Communities: | |||||||||||||||||||||||||||||||||||||||||
The Summit (d) | % | % | |||||||||||||||||||||||||||||||||||||||
Floreo (e) | % | % | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Seaport: | |||||||||||||||||||||||||||||||||||||||||
The Lawn Club (d) | % | % | |||||||||||||||||||||||||||||||||||||||
Ssäm Bar (Momofuku) (d)(e)(f) | % | % | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Tin Building by Jean-Georges (d)(e)(f) | % | % | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||
Jean-Georges Restaurants (f) | % | % | ( | ( | |||||||||||||||||||||||||||||||||||||
Strategic Developments: | |||||||||||||||||||||||||||||||||||||||||
HHMK Development | % | % | |||||||||||||||||||||||||||||||||||||||
KR Holdings | % | % | ( | ||||||||||||||||||||||||||||||||||||||
West End Alexandria (d) | % | % | |||||||||||||||||||||||||||||||||||||||
( | ( | ||||||||||||||||||||||||||||||||||||||||
Other equity investments (g) | |||||||||||||||||||||||||||||||||||||||||
Investments in unconsolidated ventures | $ | $ | $ | ( | $ | $ | ( | $ |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
3. Acquisitions and Dispositions |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
4. Impairment |
thousands | Statements of Operations Line Item | Three and Nine Months Ended September 30, 2023 | ||||||
Seaport Segment | ||||||||
Buildings and equipment | Provision for impairment | $ | ||||||
Land | Provision for impairment | |||||||
Developments | Provision for impairment | |||||||
Net investment in real estate | $ | |||||||
Investments in unconsolidated ventures | Equity in earnings (losses) from unconsolidated ventures | $ | ||||||
Total Impairment | $ |
FINANCIAL STATEMENTS FOOTNOTES |
5. Other Assets and Liabilities |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Security, escrow, and other deposits | $ | $ | |||||||||
Special Improvement District receivable, net | |||||||||||
In-place leases, net | |||||||||||
Prepaid expenses | |||||||||||
Interest rate derivative assets | |||||||||||
Intangibles, net | |||||||||||
Tenant incentives and other receivables, net | |||||||||||
Other | |||||||||||
TIF receivable, net | |||||||||||
Net investment in lease receivable | |||||||||||
Notes receivable, net | |||||||||||
Condominium inventory | |||||||||||
Other assets, net | $ | $ |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Condominium deposit liabilities | $ | $ | |||||||||
Construction payables | |||||||||||
Deferred income | |||||||||||
Accrued real estate taxes | |||||||||||
Tenant and other deposits | |||||||||||
Accrued interest | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Other | |||||||||||
Accrued payroll and other employee liabilities | |||||||||||
Accounts payable and other liabilities | $ | $ |
FINANCIAL STATEMENTS FOOTNOTES |
6. Mortgages, Notes, and Loans Payable, Net |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Fixed-rate debt | |||||||||||
Senior unsecured notes | $ | $ | |||||||||
Secured mortgages payable | |||||||||||
Special Improvement District bonds | |||||||||||
Variable-rate debt (a) | |||||||||||
Secured Bridgeland Notes | |||||||||||
Secured mortgages payable | |||||||||||
Unamortized deferred financing costs (b) | ( | ( | |||||||||
Mortgages, notes, and loans payable, net | $ | $ |
$ in thousands | Principal | Maturity Date | Interest Rate | |||||||||||||||||
August 2020 | $ | August 2028 | ||||||||||||||||||
February 2021 | February 2029 | |||||||||||||||||||
February 2021 | February 2031 | |||||||||||||||||||
Senior unsecured notes | $ |
September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
$ in thousands | Principal | Range of Interest Rates | Weighted-average Interest Rate | Weighted-average Years to Maturity | Principal | Range of Interest Rates | Weighted-average Interest Rate | Weighted-average Years to Maturity | |||||||||||||||||||||
Fixed rate (a) | $ | % | $ | % | |||||||||||||||||||||||||
Variable rate (b) | % | % | |||||||||||||||||||||||||||
Secured mortgages payable | $ | % | $ | % |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
7. Fair Value |
September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements Using | Fair Value Measurements Using | ||||||||||||||||||||||||||||||||||||||||||||||
thousands | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||||||||||||||||||||||
Interest rate derivative assets | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||
thousands | Fair Value Hierarchy | Carrying Amount | Estimated Fair Value | Carrying Amount | Estimated Fair Value | |||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Cash and Restricted cash | Level 1 | $ | $ | $ | $ | |||||||||||||||||||||
Accounts receivable, net (a) | Level 3 | |||||||||||||||||||||||||
Notes receivable, net (b) | Level 3 | |||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||
Fixed-rate debt (c) | Level 2 | |||||||||||||||||||||||||
Variable-rate debt (c) | Level 2 |
FINANCIAL STATEMENTS FOOTNOTES |
Fair Value Measurements Using | |||||||||||||||||||||||
thousands | Total Fair Value Measurement (a) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
2023 | |||||||||||||||||||||||
Seaport Net investment in real estate | $ | $ | $ | $ | |||||||||||||||||||
Seaport Investments in unconsolidated ventures | |||||||||||||||||||||||
8. Derivative Instruments and Hedging Activities |
FINANCIAL STATEMENTS FOOTNOTES |
Fair Value Asset (Liability) | |||||||||||||||||||||||||||||
thousands | Notional Amount | Fixed Interest Rate (a) | Effective Date | Maturity Date | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Derivative instruments not designated as hedging instruments: (b) | |||||||||||||||||||||||||||||
Interest rate cap | $ | % | 3/12/2021 | 9/15/2023 | $ | $ | |||||||||||||||||||||||
Interest rate cap | % | 3/12/2021 | 9/15/2023 | ||||||||||||||||||||||||||
Interest rate cap | % | 10/12/2021 | 9/29/2025 | ||||||||||||||||||||||||||
Interest rate cap | % | 10/12/2021 | 9/29/2025 | ||||||||||||||||||||||||||
Interest rate collar | 6/1/2023 | 6/1/2025 | |||||||||||||||||||||||||||
Interest rate collar | 6/1/2023 | 6/1/2025 | |||||||||||||||||||||||||||
Derivative instruments designated as hedging instruments: | |||||||||||||||||||||||||||||
Interest rate swap | $ | % | 9/21/2018 | 9/18/2023 | $ | $ | |||||||||||||||||||||||
Interest rate swap | % | 1/3/2023 | 1/1/2027 | ||||||||||||||||||||||||||
Interest rate cap | % | 11/10/2022 | 11/7/2024 | ||||||||||||||||||||||||||
Interest rate cap | % | 12/22/2022 | 12/21/2025 | ||||||||||||||||||||||||||
Interest rate swap | % | 3/1/2022 | 2/18/2027 | ||||||||||||||||||||||||||
Interest rate swap | % | 11/1/2019 | 1/1/2032 | ||||||||||||||||||||||||||
Total fair value derivative assets | $ | $ | |||||||||||||||||||||||||||
Amount of Gain (Loss) Recognized in AOCI on Derivatives | |||||||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Interest rate derivatives | $ | $ | $ | $ |
Location of Gain (Loss) Reclassified from AOCI into Statements of Operations | Amount of Gain (Loss) Reclassified from AOCI into Statements of Operations | ||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Interest expense | $ | $ | ( | $ | $ | ( |
FINANCIAL STATEMENTS FOOTNOTES |
9. Commitments and Contingencies |
FINANCIAL STATEMENTS FOOTNOTES |
FINANCIAL STATEMENTS FOOTNOTES |
10. Income Taxes |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands except percentages | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Income tax expense (benefit) | $ | ( | $ | $ | ( | $ | |||||||||||||||||
Income (loss) before income taxes | ( | ( | |||||||||||||||||||||
Effective tax rate | % | % | % | % |
11. Accumulated Other Comprehensive Income (Loss) |
thousands | |||||
Balance as of June 30, 2023 | $ | ||||
Derivative instruments: | |||||
Other comprehensive income (loss) before reclassifications | |||||
(Gain) loss reclassified from accumulated other comprehensive income (loss) to net income | ( | ||||
Net current-period other comprehensive income (loss) | ( | ||||
Balance as of September 30, 2023 | $ | ||||
Balance as of June 30, 2022 | $ | ||||
Derivative instruments: | |||||
Other comprehensive income (loss) before reclassifications | |||||
(Gain) loss reclassified from accumulated other comprehensive income (loss) to net income | |||||
Net current-period other comprehensive income (loss) | |||||
Balance at September 30, 2022 | $ | ||||
thousands | |||||
Balance as of December 31, 2022 | $ | ||||
Derivative instruments: | |||||
Other comprehensive income (loss) before reclassifications | |||||
(Gain) loss reclassified to net income | ( | ||||
Net current-period other comprehensive Income (loss) | ( | ||||
Balance at September 30, 2023 | $ | ||||
Balance at December 31, 2021 | $ | ( | |||
Derivative instruments: | |||||
Other comprehensive income (loss) before reclassifications | |||||
(Gain) loss reclassified to net income | |||||
Reclassification of the Company's share of previously deferred derivative gains to net income (a) | ( | ||||
Net current-period other comprehensive income (loss) | |||||
Balance at September 30, 2022 | $ |
FINANCIAL STATEMENTS FOOTNOTES |
Accumulated Other Comprehensive Income (Loss) Components | Amounts reclassified from Accumulated other comprehensive income (loss) | |||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | Affected line items in the Statements of Operations | ||||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
(Gains) losses on cash flow hedges | $ | ( | $ | $ | ( | $ | Interest expense | |||||||||||||||||||
Company's share of previously deferred derivative gains | ( | Equity in earnings (losses) from unconsolidated ventures | ||||||||||||||||||||||||
Income tax expense (benefit) | ( | ( | Income tax expense (benefit) | |||||||||||||||||||||||
Total reclassifications of (income) loss, net of tax | $ | ( | $ | $ | ( | $ | ( |
12. Common Stock and Equity |
13. Revenues |
FINANCIAL STATEMENTS FOOTNOTES |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Revenues from contracts with customers | |||||||||||||||||||||||
Recognized at a point in time: | |||||||||||||||||||||||
Condominium rights and unit sales | $ | $ | $ | $ | |||||||||||||||||||
Master Planned Communities land sales | |||||||||||||||||||||||
Builder price participation | |||||||||||||||||||||||
Total | |||||||||||||||||||||||
Recognized at a point in time or over time: | |||||||||||||||||||||||
Other land, rental, and property revenues | |||||||||||||||||||||||
Rental and lease-related revenues | |||||||||||||||||||||||
Rental revenue | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ | |||||||||||||||||||
Revenues by segment | |||||||||||||||||||||||
Operating Assets revenues | $ | $ | $ | $ | |||||||||||||||||||
Master Planned Communities revenues | |||||||||||||||||||||||
Seaport revenues | |||||||||||||||||||||||
Strategic Developments revenues | |||||||||||||||||||||||
Corporate revenues | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
thousands | Contract Liabilities | |||||||
Balance at December 31, 2022 | $ | |||||||
Consideration earned during the period | ( | |||||||
Consideration received during the period | ||||||||
Balance at September 30, 2023 | $ | |||||||
Balance at December 31, 2021 | $ | |||||||
Consideration earned during the period | ( | |||||||
Consideration received during the period | ||||||||
Balance at September 30, 2022 | $ | |||||||
FINANCIAL STATEMENTS FOOTNOTES |
thousands | Less than 1 year | 1 - 2 years | Thereafter | |||||||||||||||||
Total remaining unsatisfied performance obligations | $ | $ | $ |
14. Leases |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Operating lease right-of-use assets | $ | $ | |||||||||
Operating lease obligations |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Operating lease cost | $ | $ | $ | $ | |||||||||||||||||||
Variable lease costs | |||||||||||||||||||||||
Total lease cost | $ | $ | $ | $ |
FINANCIAL STATEMENTS FOOTNOTES |
thousands | Operating Leases | ||||
Remainder of 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total lease payments | |||||
Less: imputed interest | ( | ||||
Present value of lease liabilities | $ |
Supplemental Condensed Consolidated Statements of Cash Flows Information | Nine Months Ended September 30, | ||||||||||
thousands | 2023 | 2022 | |||||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
Operating cash flows on operating leases | $ | $ |
Other Information | September 30, 2023 | September 30, 2022 | |||||||||
Weighted-average remaining lease term (years) | |||||||||||
Operating leases | |||||||||||
Weighted-average discount rate | |||||||||||
Operating leases | % | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
thousands | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
Total minimum rent payments | $ | $ | $ | $ |
thousands | Total Minimum Rent | ||||
Remainder of 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ |
FINANCIAL STATEMENTS FOOTNOTES |
15. Segments |
FINANCIAL STATEMENTS FOOTNOTES |
thousands | Operating Assets Segment | MPC Segment | Seaport Segment | Strategic Developments Segment | Total | |||||||||||||||
Three Months Ended September 30, 2023 | ||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
Total operating expenses | ( | ( | ( | ( | ( | |||||||||||||||
Segment operating income (loss) | ( | ( | ||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ( | |||||||||||||||
Interest income (expense), net | ( | ( | ||||||||||||||||||
Other income (loss), net | ( | |||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | ( | ( | ||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | ||||||||||||||||||||
Gain (loss) on extinguishment of debt | ( | ( | ||||||||||||||||||
Provision for impairment | ( | ( | ||||||||||||||||||
Segment EBT | $ | $ | $ | ( | $ | $ | ( | |||||||||||||
Corporate income, expenses, and other items | ||||||||||||||||||||
Net income (loss) | ( | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | |||||||||||||||||||
Net income (loss) attributable to HHH | $ | ( | ||||||||||||||||||
Three Months Ended September 30, 2022 | ||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
Total operating expenses | ( | ( | ( | ( | ( | |||||||||||||||
Segment operating income (loss) | ||||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ( | |||||||||||||||
Interest income (expense), net | ( | ( | ||||||||||||||||||
Other income (loss), net | ( | |||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | ( | ( | ||||||||||||||||||
Segment EBT | $ | $ | $ | ( | $ | $ | ||||||||||||||
Corporate income, expenses, and other items | ( | |||||||||||||||||||
Net income (loss) | ||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ||||||||||||||||||||
Net income (loss) attributable to HHH | $ | |||||||||||||||||||
Nine Months Ended September 30, 2023 | ||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
Total operating expenses | ( | ( | ( | ( | ( | |||||||||||||||
Segment operating income (loss) | ( | ( | ||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ( | |||||||||||||||
Interest income (expense), net | ( | ( | ||||||||||||||||||
Other income (loss), net | ( | ( | ||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | ( | ( | ||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | ||||||||||||||||||||
Gain (loss) on extinguishment of debt | ( | ( | ||||||||||||||||||
Provision for impairment | ( | ( | ||||||||||||||||||
Segment EBT | $ | ( | $ | $ | ( | $ | ( | $ | ( | |||||||||||
Corporate income, expenses, and other items | ||||||||||||||||||||
Net income (loss) | ( | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ( | |||||||||||||||||||
Net income (loss) attributable to HHH | $ | ( | ||||||||||||||||||
FINANCIAL STATEMENTS FOOTNOTES |
thousands | Operating Assets Segment | MPC Segment | Seaport Segment | Strategic Developments Segment | Total | |||||||||||||||
Nine Months Ended September 30, 2022 | ||||||||||||||||||||
Total revenues | $ | $ | $ | $ | $ | |||||||||||||||
Total operating expenses | ( | ( | ( | ( | ( | |||||||||||||||
Segment operating income (loss) | ( | |||||||||||||||||||
Depreciation and amortization | ( | ( | ( | ( | ( | |||||||||||||||
Interest income (expense), net | ( | ( | ||||||||||||||||||
Other income (loss), net | ( | |||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | ( | |||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | ( | |||||||||||||||||||
Gain (loss) on extinguishment of debt | ( | ( | ||||||||||||||||||
Segment EBT | $ | $ | $ | ( | $ | $ | ||||||||||||||
Corporate income, expenses, and other items | ( | |||||||||||||||||||
Net income (loss) | ||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | ||||||||||||||||||||
Net income (loss) attributable to HHH | $ |
thousands | September 30, 2023 | December 31, 2022 | |||||||||
Operating Assets | $ | $ | |||||||||
Master Planned Communities | |||||||||||
Seaport (a) | |||||||||||
Strategic Developments | |||||||||||
Total segment assets | |||||||||||
Corporate | |||||||||||
Total assets | $ | $ |
MANAGEMENT’S NARRATIVE ANALYSIS |
Index | Page | ||||
MANAGEMENT’S NARRATIVE ANALYSIS |
FORWARD-LOOKING INFORMATION |
MANAGEMENT’S NARRATIVE ANALYSIS |
MANAGEMENT’S NARRATIVE ANALYSIS OVERVIEW |
OVERVIEW |
Description of Business |
RESULTS OF OPERATIONS |
Operating Assets |
Operating Assets Segment EBT | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Rental revenue | $ | 99,843 | $ | 91,916 | $ | 7,927 | $ | 289,914 | $ | 283,804 | $ | 6,110 | |||||||||||||||||||||||
Other land, rental, and property revenues | 17,031 | 17,577 | (546) | 49,312 | 43,938 | 5,374 | |||||||||||||||||||||||||||||
Total revenues | 116,874 | 109,493 | 7,381 | 339,226 | 327,742 | 11,484 | |||||||||||||||||||||||||||||
Operating costs | (40,016) | (37,429) | (2,587) | (115,591) | (107,319) | (8,272) | |||||||||||||||||||||||||||||
Rental property real estate taxes | (14,369) | (11,395) | (2,974) | (43,278) | (38,634) | (4,644) | |||||||||||||||||||||||||||||
(Provision for) recovery of doubtful accounts | (1,401) | (170) | (1,231) | 1,032 | (1,005) | 2,037 | |||||||||||||||||||||||||||||
Total operating expenses | (55,786) | (48,994) | (6,792) | (157,837) | (146,958) | (10,879) | |||||||||||||||||||||||||||||
Segment operating income (loss) | 61,088 | 60,499 | 589 | 181,389 | 180,784 | 605 | |||||||||||||||||||||||||||||
Depreciation and amortization | (43,127) | (37,714) | (5,413) | (123,637) | (115,143) | (8,494) | |||||||||||||||||||||||||||||
Interest income (expense), net | (31,884) | (23,340) | (8,544) | (91,080) | (64,776) | (26,304) | |||||||||||||||||||||||||||||
Other income (loss), net | (244) | 421 | (665) | 1,998 | (57) | 2,055 | |||||||||||||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | 1,364 | 4,132 | (2,768) | 5,311 | 21,898 | (16,587) | |||||||||||||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | 16,050 | — | 16,050 | 20,764 | 4,018 | 16,746 | |||||||||||||||||||||||||||||
Gain (loss) on extinguishment of debt | — | — | — | — | (645) | 645 | |||||||||||||||||||||||||||||
Segment EBT | $ | 3,247 | $ | 3,998 | $ | (751) | $ | (5,255) | $ | 26,079 | $ | (31,334) |
Operating Assets NOI | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Total Operating Assets segment EBT | $ | 3,247 | $ | 3,998 | $ | (751) | $ | (5,255) | $ | 26,079 | $ | (31,334) | |||||||||||||||||||||||
Add back: | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 43,127 | 37,714 | 5,413 | 123,637 | 115,143 | 8,494 | |||||||||||||||||||||||||||||
Interest (income) expense, net | 31,884 | 23,340 | 8,544 | 91,080 | 64,776 | 26,304 | |||||||||||||||||||||||||||||
Equity in (earnings) losses from unconsolidated ventures | (1,364) | (4,132) | 2,768 | (5,311) | (21,898) | 16,587 | |||||||||||||||||||||||||||||
(Gain) loss on sale or disposal of real estate and other assets, net | (16,050) | — | (16,050) | (20,764) | (4,018) | (16,746) | |||||||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | — | — | — | — | 645 | (645) | |||||||||||||||||||||||||||||
Impact of straight-line rent | (470) | (1,744) | 1,274 | (2,664) | (7,283) | 4,619 | |||||||||||||||||||||||||||||
Other | 336 | (519) | 855 | 420 | (312) | 732 | |||||||||||||||||||||||||||||
Operating Assets NOI | $ | 60,710 | $ | 58,657 | $ | 2,053 | $ | 181,143 | $ | 173,132 | $ | 8,011 |
Operating Assets NOI by Property Type | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Office | $ | 29,326 | $ | 28,540 | $ | 786 | $ | 90,720 | $ | 83,338 | $ | 7,382 | |||||||||||||||||||||||
Retail | 12,783 | 12,293 | 490 | 39,904 | 38,447 | 1,457 | |||||||||||||||||||||||||||||
Multi-family | 13,817 | 11,725 | 2,092 | 39,512 | 34,710 | 4,802 | |||||||||||||||||||||||||||||
Other | 4,615 | 5,316 | (701) | 10,308 | 12,762 | (2,454) | |||||||||||||||||||||||||||||
Dispositions | 169 | 783 | (614) | 699 | 3,875 | (3,176) | |||||||||||||||||||||||||||||
Operating Assets NOI | $ | 60,710 | $ | 58,657 | $ | 2,053 | $ | 181,143 | $ | 173,132 | $ | 8,011 |
Master Planned Communities |
MPC Segment EBT | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Master Planned Community land sales (a) | $ | 75,378 | $ | 52,585 | $ | 22,793 | $ | 177,045 | $ | 199,032 | $ | (21,987) | |||||||||||||||||||||||
Other land, rental, and property revenues | 4,574 | 6,751 | (2,177) | 13,315 | 16,139 | (2,824) | |||||||||||||||||||||||||||||
Builder price participation (b) | 15,847 | 18,852 | (3,005) | 45,763 | 51,819 | (6,056) | |||||||||||||||||||||||||||||
Total revenues | 95,799 | 78,188 | 17,611 | 236,123 | 266,990 | (30,867) | |||||||||||||||||||||||||||||
Master Planned Communities cost of sales | (28,264) | (19,355) | (8,909) | (66,134) | (75,304) | 9,170 | |||||||||||||||||||||||||||||
Operating costs | (12,975) | (11,700) | (1,275) | (37,534) | (37,783) | 249 | |||||||||||||||||||||||||||||
Total operating expenses | (41,239) | (31,055) | (10,184) | (103,668) | (113,087) | 9,419 | |||||||||||||||||||||||||||||
Segment operating income (loss) | 54,560 | 47,133 | 7,427 | 132,455 | 153,903 | (21,448) | |||||||||||||||||||||||||||||
Depreciation and amortization | (103) | (104) | 1 | (316) | (286) | (30) | |||||||||||||||||||||||||||||
Interest income (expense), net | 16,031 | 13,492 | 2,539 | 49,004 | 35,697 | 13,307 | |||||||||||||||||||||||||||||
Other income (loss), net | — | — | — | (103) | 23 | (126) | |||||||||||||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | 14,310 | 14,862 | (552) | 21,056 | 16,990 | 4,066 | |||||||||||||||||||||||||||||
Segment EBT | $ | 84,798 | $ | 75,383 | $ | 9,415 | $ | 202,096 | $ | 206,327 | $ | (4,231) |
MPC Segment EBT by MPC | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Bridgeland | $ | 22,535 | $ | 15,910 | $ | 6,625 | $ | 76,850 | $ | 52,139 | $ | 24,711 | |||||||||||||||||||||||
Columbia (a) | — | (738) | 738 | — | (1,095) | 1,095 | |||||||||||||||||||||||||||||
Summerlin | 62,052 | 58,141 | 3,911 | 116,996 | 152,331 | (35,335) | |||||||||||||||||||||||||||||
Teravalis (b) | (788) | (646) | (142) | (2,754) | (968) | (1,786) | |||||||||||||||||||||||||||||
The Woodlands | (745) | (1,769) | 1,024 | 4,613 | (9,969) | 14,582 | |||||||||||||||||||||||||||||
The Woodlands Hills | 1,744 | 4,485 | (2,741) | 6,391 | 13,889 | (7,498) | |||||||||||||||||||||||||||||
Segment EBT | $ | 84,798 | $ | 75,383 | $ | 9,415 | $ | 202,096 | $ | 206,327 | $ | (4,231) | |||||||||||||||||||||||
Floreo (c) | $ | (1,039) | $ | (842) | $ | (197) | $ | (2,949) | $ | (1,291) | $ | (1,658) |
MPC Net Contribution | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
MPC Segment EBT | $ | 84,798 | $ | 75,383 | $ | 9,415 | $ | 202,096 | $ | 206,327 | $ | (4,231) | |||||||||||||||||||||||
Plus: | |||||||||||||||||||||||||||||||||||
Master Planned Communities cost of sales | 28,264 | 19,355 | 8,909 | 66,134 | 75,304 | (9,170) | |||||||||||||||||||||||||||||
Depreciation and amortization | 103 | 104 | (1) | 316 | 286 | 30 | |||||||||||||||||||||||||||||
MUD and SID bonds collections, net (a) | 4,237 | 4,987 | (750) | 7,585 | 38,728 | (31,143) | |||||||||||||||||||||||||||||
Distributions from unconsolidated ventures | 600 | — | 600 | 10,050 | — | 10,050 | |||||||||||||||||||||||||||||
Less: | |||||||||||||||||||||||||||||||||||
MPC development expenditures | (83,634) | (114,729) | 31,095 | (256,214) | (286,178) | 29,964 | |||||||||||||||||||||||||||||
Equity in (earnings) losses from unconsolidated ventures | (14,310) | (14,862) | 552 | (21,056) | (16,990) | (4,066) | |||||||||||||||||||||||||||||
MPC Net Contribution | $ | 20,058 | $ | (29,762) | $ | 49,820 | $ | 8,911 | $ | 17,477 | $ | (8,566) |
thousands | Bridgeland | Columbia (a) | Summerlin | Teravalis | The Woodlands | The Woodlands Hills | Total MPC | ||||||||||||||||||||||||||||||||||
Balance December 31, 2022 | $ | 538,924 | $ | 16,625 | $ | 1,014,511 | $ | 544,546 | $ | 185,356 | $ | 111,564 | $ | 2,411,526 | |||||||||||||||||||||||||||
Development expenditures (b) | 129,092 | — | 103,430 | 105 | 3,689 | 19,898 | 256,214 | ||||||||||||||||||||||||||||||||||
MPC Cost of sales | (29,921) | — | (20,134) | — | (11,911) | (4,168) | (66,134) | ||||||||||||||||||||||||||||||||||
MUD reimbursable costs (c) | (89,908) | — | — | — | (1,166) | (17,203) | (108,277) | ||||||||||||||||||||||||||||||||||
Transfer to Strategic Development and Operating Assets Segments | (2,756) | (16,625) | — | — | (3,226) | — | (22,607) | ||||||||||||||||||||||||||||||||||
Other | (2,649) | — | (1,108) | 18 | 490 | 5,024 | 1,775 | ||||||||||||||||||||||||||||||||||
Balance September 30, 2023 | $ | 542,782 | $ | — | $ | 1,096,699 | $ | 544,669 | $ | 173,232 | $ | 115,115 | $ | 2,472,497 |
Seaport |
Seaport Segment EBT | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Rental revenue (a) | $ | 5,213 | $ | 5,001 | $ | 212 | $ | 16,231 | $ | 12,277 | $ | 3,954 | |||||||||||||||||||||||
Other land, rental, and property revenues | 24,277 | 27,500 | (3,223) | 47,960 | 57,776 | (9,816) | |||||||||||||||||||||||||||||
Total revenues | 29,490 | 32,501 | (3,011) | 64,191 | 70,053 | (5,862) | |||||||||||||||||||||||||||||
Operating costs | (33,084) | (31,295) | (1,789) | (78,341) | (77,377) | (964) | |||||||||||||||||||||||||||||
Rental property real estate taxes | (174) | (173) | (1) | (511) | (719) | 208 | |||||||||||||||||||||||||||||
(Provision for) recovery of doubtful accounts | (45) | 64 | (109) | (32) | (1,233) | 1,201 | |||||||||||||||||||||||||||||
Total operating expenses | (33,303) | (31,404) | (1,899) | (78,884) | (79,329) | 445 | |||||||||||||||||||||||||||||
Segment operating income (loss) | (3,813) | 1,097 | (4,910) | (14,693) | (9,276) | (5,417) | |||||||||||||||||||||||||||||
Depreciation and amortization | (10,808) | (9,651) | (1,157) | (31,804) | (25,194) | (6,610) | |||||||||||||||||||||||||||||
Interest income (expense), net | 1,358 | 1,731 | (373) | 3,855 | 3,003 | 852 | |||||||||||||||||||||||||||||
Other income (loss), net | 313 | (18) | 331 | (1,287) | 289 | (1,576) | |||||||||||||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures (a) | (46,619) | (11,273) | (35,346) | (68,335) | (20,223) | (48,112) | |||||||||||||||||||||||||||||
Gain (loss) on extinguishment of debt | (48) | — | (48) | (48) | — | (48) | |||||||||||||||||||||||||||||
Provision for impairment | (672,492) | — | (672,492) | (672,492) | — | (672,492) | |||||||||||||||||||||||||||||
Segment EBT | $ | (732,109) | $ | (18,114) | $ | (713,995) | $ | (784,804) | $ | (51,401) | $ | (733,403) |
Seaport NOI | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Total Seaport segment EBT | $ | (732,109) | $ | (18,114) | $ | (713,995) | $ | (784,804) | $ | (51,401) | $ | (733,403) | |||||||||||||||||||||||
Add back: | |||||||||||||||||||||||||||||||||||
Depreciation and amortization | 10,808 | 9,651 | 1,157 | 31,804 | 25,194 | 6,610 | |||||||||||||||||||||||||||||
Interest (income) expense, net | (1,358) | (1,731) | 373 | (3,855) | (3,003) | (852) | |||||||||||||||||||||||||||||
Equity in (earnings) losses from unconsolidated ventures | 46,619 | 11,273 | 35,346 | 68,335 | 20,223 | 48,112 | |||||||||||||||||||||||||||||
(Gain) loss on extinguishment of debt | 48 | — | 48 | 48 | — | 48 | |||||||||||||||||||||||||||||
Impact of straight-line rent | 435 | (185) | 620 | 1,567 | 1,519 | 48 | |||||||||||||||||||||||||||||
Other (income) loss, net | 2,163 | 674 | 1,489 | 5,480 | 2,610 | 2,870 | |||||||||||||||||||||||||||||
Provision for impairment | 672,492 | — | 672,492 | 672,492 | — | 672,492 | |||||||||||||||||||||||||||||
Seaport NOI | $ | (902) | $ | 1,568 | $ | (2,470) | $ | (8,933) | $ | (4,858) | $ | (4,075) |
Seaport NOI by Category | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Landlord Operations | $ | (6,242) | $ | (4,335) | $ | (1,907) | $ | (15,292) | $ | (10,260) | $ | (5,032) | |||||||||||||||||||||||
Landlord Operations - Multi-family | 15 | 22 | (7) | 76 | 96 | (20) | |||||||||||||||||||||||||||||
Managed Businesses | 644 | 1,010 | (366) | (1,942) | 149 | (2,091) | |||||||||||||||||||||||||||||
Tin Building | 2,286 | 1,612 | 674 | 7,061 | 1,612 | 5,449 | |||||||||||||||||||||||||||||
Events and Sponsorships | 2,395 | 3,259 | (864) | 1,164 | 3,545 | (2,381) | |||||||||||||||||||||||||||||
Seaport NOI | $ | (902) | $ | 1,568 | $ | (2,470) | $ | (8,933) | $ | (4,858) | $ | (4,075) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Tin Building | $ | 2,286 | $ | 1,612 | $ | 674 | $ | 7,061 | $ | 1,612 | $ | 5,449 | |||||||||||||||||||||||
Tin Building by Jean-Georges | (8,074) | (11,366) | 3,292 | (26,867) | (20,565) | (6,302) | |||||||||||||||||||||||||||||
Total | $ | (5,788) | $ | (9,754) | $ | 3,966 | $ | (19,806) | $ | (18,953) | $ | (853) |
Strategic Developments |
Strategic Developments Segment EBT | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Condominium rights and unit sales | $ | 25,962 | $ | 418,645 | $ | (392,683) | $ | 46,915 | $ | 459,681 | $ | (412,766) | |||||||||||||||||||||||
Rental revenue | 136 | — | 136 | 250 | — | 250 | |||||||||||||||||||||||||||||
Other land, rental, and property revenues | 383 | 708 | (325) | 1,514 | 1,974 | (460) | |||||||||||||||||||||||||||||
Total revenues | 26,481 | 419,353 | (392,872) | 48,679 | 461,655 | (412,976) | |||||||||||||||||||||||||||||
Condominium rights and unit cost of sales | (22,537) | (295,300) | 272,763 | (56,390) | (329,026) | 272,636 | |||||||||||||||||||||||||||||
Operating costs | (6,364) | (4,665) | (1,699) | (17,160) | (14,284) | (2,876) | |||||||||||||||||||||||||||||
Rental property real estate taxes | (719) | (550) | (169) | (2,470) | (961) | (1,509) | |||||||||||||||||||||||||||||
Total operating expenses | (29,620) | (300,515) | 270,895 | (76,020) | (344,271) | 268,251 | |||||||||||||||||||||||||||||
Segment operating income (loss) | (3,139) | 118,838 | (121,977) | (27,341) | 117,384 | (144,725) | |||||||||||||||||||||||||||||
Depreciation and amortization | (962) | (1,406) | 444 | (2,848) | (4,083) | 1,235 | |||||||||||||||||||||||||||||
Interest income (expense), net | 4,412 | 5,817 | (1,405) | 11,917 | 12,334 | (417) | |||||||||||||||||||||||||||||
Other income (loss), net | 81 | 900 | (819) | 158 | 1,361 | (1,203) | |||||||||||||||||||||||||||||
Equity in earnings (losses) from unconsolidated ventures | 59 | (13) | 72 | 94 | 863 | (769) | |||||||||||||||||||||||||||||
Gain (loss) on sale or disposal of real estate and other assets, net | 236 | — | 236 | 236 | (9) | 245 | |||||||||||||||||||||||||||||
Segment EBT | $ | 687 | $ | 124,136 | $ | (123,449) | $ | (17,784) | $ | 127,850 | $ | (145,634) |
Units Closed | Units Under Contract | Total Units | Total % of Units Closed or Under Contract | Total % of Residential Square Feet Closed or Under Contract | Completion Date | ||||||||||||||||||
Completed | |||||||||||||||||||||||
Waiea | (a) | 177 | — | 177 | 100.0 | % | 100.0 | % | Q4 2016 | ||||||||||||||
Anaha | (a) | 317 | — | 317 | 100.0 | % | 100.0 | % | Q4 2017 | ||||||||||||||
Ae`o | (a) | 465 | — | 465 | 100.0 | % | 100.0 | % | Q4 2018 | ||||||||||||||
Ke Kilohana | (a) | 423 | — | 423 | 100.0 | % | 100.0 | % | Q2 2019 | ||||||||||||||
‘A‘ali‘i | (a) | 750 | — | 750 | 100.0 | % | 100.0 | % | Q4 2021 | ||||||||||||||
Kō'ula | (b) | 564 | — | 565 | 99.8 | % | 99.9 | % | Q3 2022 | ||||||||||||||
Under construction | |||||||||||||||||||||||
Victoria Place | — | 349 | 349 | 100.0 | % | 100.0 | % | Q3 2024 | |||||||||||||||
The Park Ward Village | (c) | — | 510 | 545 | 93.6 | % | 94.2 | % | 2025 | ||||||||||||||
Ulana Ward Village | (d) | — | 696 | 696 | 100.0 | % | 100.0 | % | 2025 | ||||||||||||||
Predevelopment | |||||||||||||||||||||||
Kalae | (e) | — | 280 | 329 | 85.1 | % | 88.5 | % | 2026 | ||||||||||||||
Corporate Income, Expenses, and Other Items |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
thousands | 2023 | 2022 | $ Change | 2023 | 2022 | $ Change | |||||||||||||||||||||||||||||
Corporate income | $ | 15 | $ | 14 | $ | 1 | $ | 45 | $ | 43 | $ | 2 | |||||||||||||||||||||||
General and administrative | (21,410) | (19,471) | (1,939) | (65,180) | (60,874) | (4,306) | |||||||||||||||||||||||||||||
Corporate interest expense, net | (20,740) | (21,078) | 338 | (67,519) | (64,948) | (2,571) | |||||||||||||||||||||||||||||
Corporate other income (loss), net | 23 | 701 | (678) | 2,781 | 881 | 1,900 | |||||||||||||||||||||||||||||
Corporate depreciation and amortization | (974) | (1,140) | 166 | (2,599) | (2,878) | 279 | |||||||||||||||||||||||||||||
Other | (2,225) | (2,902) | 677 | (8,885) | (7,985) | (900) | |||||||||||||||||||||||||||||
Income tax (expense) benefit | 144,701 | (33,858) | 178,559 | 161,349 | (41,822) | 203,171 | |||||||||||||||||||||||||||||
Total Corporate income, expenses and other items | $ | 99,390 | $ | (77,734) | $ | 177,124 | $ | 19,992 | $ | (177,583) | $ | 197,575 |
DISCLOSURE CONTROLS AND PROCEDURES |
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING |
OTHER INFORMATION |
PART II |
RISKS RELATED TO THE COMPANY'S HOLDING COMPANY STRUCTURE OF THE COMPANY'S PARENT |
Exhibit Number | Description | |||||||
2.1 | ||||||||
3.1 | ||||||||
3.2 | ||||||||
10.1 | ||||||||
31.1+ | ||||||||
31.2+ | ||||||||
32.1++ | ||||||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH+ | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL+ | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.LAB+ | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE+ | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
101.DEF+ | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
SIGNATURE |
The Howard Hughes Corporation | |||||||||||
By: | /s/ Carlos A. Olea | ||||||||||
Carlos A. Olea | |||||||||||
Chief Financial Officer | |||||||||||
November 6, 2023 |
By: | /s/ David R. O'Reilly | |||||||
David R. O'Reilly | ||||||||
Chief Executive Officer | ||||||||
November 6, 2023 |
By: | /s/ Carlos A. Olea | |||||||
Carlos A. Olea | ||||||||
Chief Financial Officer | ||||||||
November 6, 2023 |
By: | /s/ David R. O'Reilly | ||||||||||
David R. O'Reilly | |||||||||||
Chief Executive Officer | |||||||||||
November 6, 2023 | |||||||||||
By: | /s/ Carlos A. Olea | ||||||||||
Carlos A. Olea | |||||||||||
Chief Financial Officer | |||||||||||
November 6, 2023 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, shares authorized (in shares) | 0 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 10 | 150,000,000 |
Common stock, shares issued (in shares) | 10 | 56,226,273 |
Common stock, shares outstanding (in shares) | 10 | 49,801,997 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Treasury stock (in shares) | 0 | 6,424,276 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||||
Statement of Comprehensive Income [Abstract] | ||||||||
Net income (loss) | $ (543,987) | $ 107,669 | $ (585,755) | $ 131,272 | ||||
Other comprehensive income (loss): | ||||||||
Interest rate caps and swaps | [1] | (182) | 7,522 | (2,764) | 31,064 | |||
Reclassification of the Company's share of previously deferred derivative gains to net income | [2] | 0 | 0 | 0 | (6,723) | |||
Other comprehensive income (loss) | (182) | 7,522 | (2,764) | 24,341 | ||||
Comprehensive income (loss) | (544,169) | 115,191 | (588,519) | 155,613 | ||||
Comprehensive (income) loss attributable to noncontrolling interests | (46) | 427 | (166) | 510 | ||||
Comprehensive income (loss) attributable to Howard Hughes Holdings Inc. | $ (544,215) | $ 115,618 | $ (588,685) | $ 156,123 | ||||
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Interest rate swaps, tax expense (benefit) | $ (53) | $ 2,247 | $ (811) | $ 9,279 | |
Income (loss) from equity method investments | $ 30,886 | $ (7,708) | $ 41,874 | (19,528) | |
Share of investee's other comprehensive income, tax expense | $ 1,900 | $ 1,912 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | 110 North Wacker | |||||
AOCI, reclassification of cash flow hedge | 6,700 | ||||
Income (loss) from equity method investments | $ (8,600) |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($) $ in Thousands |
Total |
Ward Village Homeowners' Associations |
Total Stockholders’ Equity |
Common Stock |
Additional Paid-in Capital |
Retained Earnings (Accumulated Deficit) |
Accumulated Other Comprehensive Income (Loss) |
Treasury Stock |
Noncontrolling Interests |
Noncontrolling Interests
Ward Village Homeowners' Associations
|
|||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at the beginning of the period (in shares) at Dec. 31, 2021 | 56,173,276 | ||||||||||||||
Balance at the beginning of the period at Dec. 31, 2021 | $ 3,710,670 | $ 3,709,995 | $ 563 | $ 3,960,418 | $ (16,456) | $ (14,457) | $ (220,073) | $ 675 | |||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2021 | (2,107,615) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income (loss) | 131,272 | 131,782 | 131,782 | (510) | |||||||||||
Interest rate swaps, net of tax | 31,064 | [1] | 31,064 | 31,064 | |||||||||||
Deconsolidation of Ward Village homeowners’ associations | $ (210) | $ (210) | |||||||||||||
Teravalis noncontrolling interest | 65,046 | 65,046 | |||||||||||||
Reclassification of the Company’s share of previously deferred derivative gains, net of tax expense | [2] | (6,723) | (6,723) | (6,723) | |||||||||||
Repurchase of common shares (in shares) | (4,283,874) | ||||||||||||||
Repurchase of common shares | (388,372) | (388,372) | $ (388,372) | ||||||||||||
Stock plan activity (in shares) | 134,110 | (14,896) | |||||||||||||
Stock plan activity | 8,144 | 8,144 | $ 1 | 9,422 | $ (1,279) | ||||||||||
Balance at the end of the period (in shares) at Sep. 30, 2022 | 56,307,386 | ||||||||||||||
Balance at the end of the period at Sep. 30, 2022 | 3,550,891 | 3,485,890 | $ 564 | 3,969,840 | 115,326 | 9,884 | $ (609,724) | 65,001 | |||||||
Balance at the end of the period (in shares) at Sep. 30, 2022 | (6,406,385) | ||||||||||||||
Balance at the beginning of the period (in shares) at Jun. 30, 2022 | 56,295,548 | ||||||||||||||
Balance at the beginning of the period at Jun. 30, 2022 | 3,443,801 | 3,393,398 | $ 564 | 3,967,194 | 7,230 | 2,362 | $ (583,952) | 50,403 | |||||||
Balance at the beginning of the period (in shares) at Jun. 30, 2022 | (6,032,999) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income (loss) | 107,669 | 108,096 | 108,096 | (427) | |||||||||||
Interest rate swaps, net of tax | 7,522 | [1] | 7,522 | 7,522 | |||||||||||
Teravalis noncontrolling interest | 15,025 | 15,025 | |||||||||||||
Repurchase of common shares (in shares) | (368,806) | ||||||||||||||
Repurchase of common shares | (25,440) | (25,440) | $ (25,440) | ||||||||||||
Stock plan activity (in shares) | 11,838 | (4,580) | |||||||||||||
Stock plan activity | 2,314 | 2,314 | 2,646 | $ (332) | |||||||||||
Balance at the end of the period (in shares) at Sep. 30, 2022 | 56,307,386 | ||||||||||||||
Balance at the end of the period at Sep. 30, 2022 | $ 3,550,891 | 3,485,890 | $ 564 | 3,969,840 | 115,326 | 9,884 | $ (609,724) | 65,001 | |||||||
Balance at the end of the period (in shares) at Sep. 30, 2022 | (6,406,385) | ||||||||||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2022 | 49,801,997 | 56,226,273 | |||||||||||||
Balance at the beginning of the period at Dec. 31, 2022 | $ 3,606,112 | 3,540,499 | $ 564 | 3,972,561 | 168,077 | 10,335 | $ (611,038) | 65,613 | |||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2022 | (6,424,276) | (6,424,276) | |||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income (loss) | $ (585,755) | (585,921) | (585,921) | 166 | |||||||||||
Interest rate swaps, net of tax | (2,764) | [1] | (2,764) | (2,764) | |||||||||||
Teravalis noncontrolling interest | 177 | 177 | |||||||||||||
Stock plan activity (in shares) | 322,506 | (21,628) | |||||||||||||
Stock plan activity | 9,418 | 9,418 | $ 2 | 11,138 | $ (1,722) | ||||||||||
Stock conversion to HHH (in shares) | (56,548,779) | 6,445,904 | |||||||||||||
Stock conversion to HHH | 0 | $ (566) | (612,194) | $ 612,760 | |||||||||||
HHC shares issued to HHH (in shares) | 10 | ||||||||||||||
Capital transactions with HHH | 2,485 | 2,485 | 2,623 | (138) | |||||||||||
Other | $ (22) | (22) | |||||||||||||
Balance at the end of the period (in shares) at Sep. 30, 2023 | 10 | 10 | |||||||||||||
Balance at the end of the period at Sep. 30, 2023 | $ 3,029,651 | 2,963,717 | $ 0 | 3,374,128 | (417,982) | 7,571 | $ 0 | 65,934 | |||||||
Balance at the end of the period (in shares) at Sep. 30, 2023 | 0 | 0 | |||||||||||||
Balance at the beginning of the period (in shares) at Jun. 30, 2023 | 56,533,030 | ||||||||||||||
Balance at the beginning of the period at Jun. 30, 2023 | $ 3,568,453 | 3,502,625 | $ 566 | 3,980,780 | 126,189 | 7,753 | $ (612,663) | 65,828 | |||||||
Balance at the beginning of the period (in shares) at Jun. 30, 2023 | (6,444,748) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||
Net income (loss) | (543,987) | (544,033) | (544,033) | 46 | |||||||||||
Interest rate swaps, net of tax | (182) | [1] | (182) | (182) | |||||||||||
Teravalis noncontrolling interest | 60 | 60 | |||||||||||||
Stock plan activity (in shares) | 15,749 | (1,156) | |||||||||||||
Stock plan activity | 2,822 | 2,822 | 2,919 | $ (97) | |||||||||||
Stock conversion to HHH (in shares) | (56,548,779) | 6,445,904 | |||||||||||||
Stock conversion to HHH | 0 | $ (566) | (612,194) | $ 612,760 | |||||||||||
HHC shares issued to HHH (in shares) | 10 | ||||||||||||||
Capital transactions with HHH | $ 2,485 | 2,485 | 2,623 | (138) | |||||||||||
Balance at the end of the period (in shares) at Sep. 30, 2023 | 10 | 10 | |||||||||||||
Balance at the end of the period at Sep. 30, 2023 | $ 3,029,651 | $ 2,963,717 | $ 0 | $ 3,374,128 | $ (417,982) | $ 7,571 | $ 0 | $ 65,934 | |||||||
Balance at the end of the period (in shares) at Sep. 30, 2023 | 0 | 0 | |||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY UNAUDITED (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|---|
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Interest rate swaps, tax expense (benefit) | $ (53) | $ 2,247 | $ (811) | $ 9,279 | |
Share of investee's other comprehensive income, tax expense (benefit) | $ 1,900 | 1,912 | |||
Income (loss) from equity method investments | $ 30,886 | $ (7,708) | $ 41,874 | $ (19,528) | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations | 110 North Wacker | |||||
AOCI, reclassification of cash flow hedge | 6,700 | ||||
Income (loss) from equity method investments | $ (8,600) |
Presentation of Financial Statements and Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Presentation of Financial Statements and Significant Accounting Policies |
New Holding Company Structure On July 17, 2023, The Howard Hughes Corporation (HHC or the Company) announced that its Board of Directors authorized the creation of a holding company structure. On August 11, 2023, upon the consummation of the transaction, Howard Hughes Holdings Inc. (HHH), the new parent holding company, replaced HHC as the public company trading on the New York Stock Exchange. Existing shares of common stock of HHC were automatically converted, on a one-for-one basis, into shares of common stock of HHH, with the same designations, rights, powers, and preferences, and the same qualifications, limitations, and restrictions, as the shares of HHC common stock immediately prior to the reorganization. HHH became the successor issuer to HHC pursuant to Rule 12g-3 (a) under the Exchange Act and replaced HHC as the public company trading on the New York Stock Exchange under the ticker symbol "HHH." The Company believes that the reorganization will promote the growth of its businesses by providing additional flexibility to fund future investment opportunities and to segregate assets and related liabilities in separate subsidiaries. Seaport Entertainment On October 5, 2023, HHH announced the intent to form a new division, Seaport Entertainment, that is expected to include HHC’s entertainment-related assets in New York and Las Vegas, including the Seaport in Lower Manhattan and the Las Vegas Aviators Triple-A Minor League Baseball team, as well as HHC’s ownership stake in Jean-Georges Restaurants and its 80% interest in the air rights above the Fashion Show Mall in Las Vegas. HHH is establishing Seaport Entertainment with the intention of completing its spinoff as an independent, publicly traded company in 2024, but there can be no assurance regarding the ultimate timing of the spinoff or that the spinoff will ultimately occur. The planned separation of Seaport Entertainment from Howard Hughes will refine the identity of HHH as a pure-play real estate company focused solely on its portfolio of acclaimed master planned communities and allow the new company, Seaport Entertainment, to operate independently as an entertainment-focused enterprise. General These unaudited Condensed Consolidated Financial Statements have been prepared by HHC in accordance with accounting principles generally accepted in the United States of America (GAAP). References to HHC, the Company, we, us, and our, refer to The Howard Hughes Corporation and its consolidated subsidiaries unless otherwise specifically stated. References to HHH refer to the Company’s parent holding company, Howard Hughes Holding Inc., and its consolidated subsidiaries, including the Company, unless otherwise specifically stated. In accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as issued by the Securities and Exchange Commission (the SEC), these Condensed Consolidated Financial Statements do not include all of the information and disclosures required by GAAP for complete financial statements. Readers of this quarterly report on Form 10-Q (Quarterly Report) should refer to The Howard Hughes Corporation audited Consolidated Financial Statements, which are included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on February 27, 2023 (the Annual Report). In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and equity for the interim periods have been included. The results for the three and nine months ended September 30, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023, and future fiscal years. Principles of Consolidation The consolidated financial statements include the accounts of The Howard Hughes Corporation and its subsidiaries after elimination of intercompany balances and transactions. The Company also consolidates certain variable interest entities (VIEs) in accordance with Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 810 Consolidation. The outside equity interests in certain entities controlled by the Company are reflected in the Condensed Consolidated Financial Statements as noncontrolling interests. HHC’s consolidated financial statements reflect the impacts of the holding company reorganization discussed above on a prospective basis. Certain amounts in the 2022 Condensed Consolidated Balance Sheet have been reclassified to conform to the current presentation. Specifically, the Company reclassified Net investment in lease receivable and Notes receivable, net to Other assets, net within Total assets. Management has evaluated for disclosure or recognition all material events occurring subsequent to the date of the Condensed Consolidated Financial Statements up to the date and time this Quarterly Report was filed. Restricted Cash Restricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to escrowed condominium deposits by buyers and other amounts related to taxes, insurance, and legally restricted security deposits and leasing costs. Accounts Receivable, net Accounts receivable, net includes straight-line rent receivables, tenant receivables, and other receivables. On a quarterly basis, management reviews straight-line rent receivables and tenant receivables for collectability. As required under ASC 842 Leases, this analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses under ASC 450 Contingencies if the estimated loss amount is probable and can be reasonably estimated. The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Condensed Consolidated Balance Sheets:
(a)As of September 30, 2023, the total reserve balance for amounts considered uncollectible was $11.4 million, comprised of $7.4 million related to ASC 842 and $4.0 million related to ASC 450. As of December 31, 2022, the total reserve balance was $8.9 million, comprised of $3.4 million related to ASC 842 and $5.5 million related to ASC 450. The following table summarizes the impacts of the ASC 842 and ASC 450 reserves in the accompanying Condensed Consolidated Statements of Operations:
Income Taxes HHC is a directly owned subsidiary of HHH and will be included in Howard Hughes Holding Inc. and Subsidiaries’ U.S. Federal income tax return. The Company’s financial statements recognize the current and deferred income tax consequences that result from HHC’s activities during the current period pursuant to the provisions of ASC 740 Income Taxes as if the Company were a separate taxpayer rather than a member of Howard Hughes Holding Inc.’s consolidated income tax return group. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, the future cash flows used in impairment analysis and fair value used in impairment calculations, allocation of capitalized development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired, and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, and the fair value of warrants, debt, and options granted. In particular, Master Planned Communities (MPC) cost of sales estimates are highly judgmental as they are sensitive to cost escalation, sales price escalation, and lot absorption, which are subject to judgment and affected by expectations about future market or economic conditions. Actual results could differ from these and other estimates. Noncontrolling Interests As of September 30, 2023, and December 31, 2022, noncontrolling interests primarily related to the 12.0% noncontrolling interest in Teravalis and the noncontrolling interest in the Ward Village Homeowners’ Associations (HOAs). All revenues and expenses related to the HOAs are attributable to noncontrolling interests and do not impact net income attributable to common stockholders. Refer to Note 3 - Acquisitions and Dispositions for additional information on Teravalis. Financial Instruments - Credit Losses The Company is exposed to credit losses through the sale of goods and services to the Company’s customers. Receivables held by the Company primarily relate to short-term trade receivables and financing receivables, which include Municipal Utility District (MUD) receivables, Special Improvement District (SID) bonds, Tax Increment Financing (TIF) receivables, net investments in lease receivables, and notes receivable. The Company assesses its exposure to credit loss based on historical collection experience and future expectations by portfolio segment. Historical collection experience is evaluated on a quarterly basis by the Company. The amortized cost basis of financing receivables, consisting primarily of MUD receivables, totaled $658.5 million as of September 30, 2023, and $545.4 million as of December 31, 2022. The MUD receivable balance included accrued interest of $51.4 million as of September 30, 2023, and $36.4 million as of December 31, 2022. There has been no material activity in the allowance for credit losses for financing receivables for the nine months ended September 30, 2023, and 2022. Financing receivables are considered to be past due once they are 30 days contractually past due under the terms of the agreement. The Company does not have significant receivables that are past due or on nonaccrual status. There have been no significant write-offs or recoveries of amounts previously written off during the current period for financing receivables. Recently Issued Accounting Standards The following is a summary of recently issued accounting pronouncements which relate to the Company’s business. ASU 2020-04, Reference Rate Reform When certain conditions are met, the amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this Update were initially effective as of March 12, 2020, through December 31, 2022. On December 21, 2022, the FASB issued Accounting Standards Update (ASU) 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period entities can utilize the reference rate reform relief guidance under ASU 2020-04, from December 31, 2022, to December 31, 2024. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedge transactions will be based matches the index on the corresponding derivatives. The application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur through the effective date of December 31, 2024.
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Investments in Unconsolidated Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Unconsolidated Ventures |
In the ordinary course of business, the Company enters into partnerships and ventures with an emphasis on investments associated with the development and operation of real estate assets. As of September 30, 2023, the Company does not consolidate the investments below as it does not have a controlling financial interest in these investments. As such, the Company primarily reports its interests in accordance with the equity method. As of September 30, 2023, these ventures had financings totaling $259.9 million, with the Company’s proportionate share of this debt totaling $128.6 million. All of this indebtedness is without recourse to the Company, with the exception of the collateral maintenance obligation for Floreo. See Note 9 - Commitments and Contingencies for additional information related to the Company’s collateral maintenance obligation. Investments in unconsolidated ventures consist of the following:
(a)Ownership interests presented reflect the Company’s stated ownership interest or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities. (b)The Metropolitan Downtown Columbia was in a deficit position of $9.4 million at September 30, 2023, and $9.0 million at December 31, 2022, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets. (c)M.flats/TEN.M was in a deficit position of $2.2 million at September 30, 2023, and $1.8 million at December 31, 2022, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets. (d)For these equity method investments, various provisions in the venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses, and preferred returns may result in the Company’s economic interest differing from its stated interest or final profit-sharing interest. For these investments, the Company recognizes income or loss based on the venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing interest. (e)Classified as a VIE; however, the Company is not the primary beneficiary and accounts for its investment in accordance with the equity method. Refer to discussion below for additional information. (f)These investments were impaired as part of the Seaport impairment recognized in the current period. Refer to specific investment discussion below and Note 4 - Impairment for additional details. (g)Other equity investments represent investments not accounted for under the equity method. The Company elected the measurement alternative as these investments do not have readily determinable fair values. There were no impairments, or upward or downward adjustments to the carrying amounts of these securities either during current year or cumulatively. As of September 30, 2023, Other equity investments primarily includes $10.0 million of warrants, which represents cash paid by the Company for the option to acquire additional ownership interest in Jean-Georges Restaurants. Refer to discussion below for additional details. 110 North Wacker The Company formed a partnership with a local developer (the Partnership) in 2017. In 2018, the Partnership executed an agreement with USAA related to 110 North Wacker to construct and operate the building at 110 North Wacker through a separate legal entity (the Venture). In March 2022, the Partnership completed the sale of its ownership interest in the Venture for a gross sales price of $208.6 million. Upon sale, the Company recognized income of $5.0 million in Equity in earnings (losses) from unconsolidated ventures on the Condensed Consolidated Statements of Operations, inclusive of the impact of related transaction costs and net fair value gains that were reclassed out of Accumulated other comprehensive income (loss) associated with the Venture’s derivative instruments. Based upon the Partnership’s waterfall, $168.9 million of the net sales proceeds were allocated to the Company with the remaining $22.1 million distributed to the local developer. The Lawn Club In 2021, the Company formed HHC Lawn Games, LLC with The Lawn Club NYC, LLC (Endorphin Ventures), to construct and operate an immersive indoor and outdoor restaurant that includes an extensive area of indoor grass, a stylish clubhouse bar, and a wide variety of lawn games. This concept is expected to open in the fourth quarter of 2023. Under the terms of the initial agreement, the Company funded 80% of the cost to construct the restaurant, and Endorphin Ventures contributed the remaining 20%. In October 2023, the members executed an amended LLC agreement, in which the Company will fund 90% of any remaining capital requirements, and Endorphin Ventures will contribute 10%. The Company will recognize its share of income or loss based on the joint venture distribution priorities, as amended, which could fluctuate over time. Upon return of each member’s contributed capital and a preferred return to HHC, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest. The Company also entered into a lease agreement with HHC Lawn Games, LLC to lease over 20,000 square feet of the Fulton Market Building for this venture. Ssäm Bar In 2016, the Company formed Pier 17 Restaurant C101, LLC (Ssäm Bar) with MomoPier, LLC (Momofuku) to construct and operate a restaurant and bar at Pier 17 in the Seaport, which opened in 2019. The Company recognized its share of income or loss based on the joint venture’s distribution priorities, which could fluctuate over time. During the third quarter of 2023, the Ssäm Bar restaurant closed, and the Company and Momofuku are in the process of dissolving the venture. Additionally, the Company recognized an impairment of $5.0 million related to this investment in the current period. See Note 4 - Impairment for additional details. Tin Building by Jean-Georges In 2015, the Company, together with VS-Fulton Seafood Market, LLC (Fulton Partner), formed Fulton Seafood Market, LLC (Tin Building by Jean-Georges) to operate a 53,783 square-foot culinary marketplace in the historic Tin Building. The Fulton Partner is a wholly owned subsidiary of Jean-Georges Restaurants. The Company purchased a 25% interest in Jean-George Restaurants in March 2022 as discussed below. The Company owns 100% of the Tin Building and leased 100% of the space to the Tin Building by Jean-Georges joint venture. Throughout this report, references to the Tin Building relate to the Company’s 100% owned landlord operations and references to the Tin Building by Jean-Georges refer to the managed business in which the Company has an equity ownership interest. The Company, as landlord, funded 100% of the development and construction of the Tin Building. Under the terms of the Tin Building by Jean-Georges LLC agreement, the Company contributes the cash necessary to fund pre-opening, opening, and operating costs of Fulton Seafood Market LLC. The Fulton Partner is not required to make any capital contributions. The Tin Building was completed and placed in service during the third quarter of 2022 and the Tin Building by Jean-Georges culinary marketplace began operations in the third quarter of 2022. Based on capital contribution and distribution provisions for the Tin Building by Jean-Georges, the Company currently receives substantially all of the economic interest in the venture. Upon return of the Company’s contributed capital and a preferred return, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest. As of September 30, 2023, the Tin Building by Jean-Georges is classified as a VIE because the equity holders, as a group, lack the characteristics of a controlling financial interest. The Company further concluded that it is not the primary beneficiary of the VIE as it does not have the power to direct the restaurant-related activities that most significantly impact its economic performance. As the Company is unable to quantify the amount of future capital contributions associated with this investment, the Company’s maximum exposure to loss is currently equal to the $12.8 million carrying value of the investment as of September 30, 2023. The Company funded capital contributions of $36.6 million for the nine months ended September 30, 2023, and $43.1 million for the year ended December 31, 2022. The Company recognized an impairment of $1.2 million related to this investment in the current period. See Note 4 - Impairment for additional details. Jean-Georges Restaurants In March 2022, the Company acquired a 25% interest in JG Restaurant HoldCo LLC (Jean-Georges Restaurants) for $45.0 million from JG TopCo LLC (Jean-Georges). Jean-Georges Restaurants currently has over 40 hospitality offerings and a pipeline of new concepts. The Company accounts for its ownership interest in accordance with the equity method and recorded its initial investment at cost, inclusive of legal fees and transaction costs. Under the terms of the agreement, all cash distributions and the recognition of income-producing activities will be pro rata based on stated ownership interest. The Company recognized an impairment of $30.8 million related to this investment in the current period. See Note 4 - Impairment for additional details. Concurrent with the Company’s acquisition of the 25% interest in Jean-Georges Restaurants, the Company entered into a warrant agreement with Jean-Georges. The Company paid $10.0 million for the option to acquire up to an additional 20% interest in Jean-Georges Restaurants at a fixed exercise price per share subject to certain anti-dilution provisions. Should the warrant agreement be exercised by the Company, the $10.0 million will be credited against the aggregate exercise price of the warrants. Per the agreement, the $10.0 million is to be used for working capital of Jean-Georges Restaurants. The warrant became exercisable on March 2, 2022, subject to automatic exercise in the event of dissolution or liquidation, and will expire on March 2, 2026. As of September 30, 2023, this warrant had not been exercised. The Company elected the measurement alternative for this purchase option as the equity security does not have a readily determinable fair value. As such, the investment is measured at cost, less any identified impairment charges. Creative Culinary Management Company, LLC (CCMC), a wholly owned subsidiary of Jean-Georges Restaurants, provides management services for certain retail and food and beverage businesses that the Company owns, either wholly or through partnerships with third parties. The Company’s businesses managed by CCMC include the Tin Building by Jean-Georges, The Fulton, and Malibu Farm. Additionally, in October 2023, the Lawn Club venture executed a management agreement with CCMC. Pursuant to the various management agreements, CCMC is responsible for employment and supervision of all employees providing services for the food and beverage operations and restaurant as well as the day-to-day operations and accounting for the food and beverage operations. The Summit In 2015, the Company formed DLV/HHPI Summerlin, LLC (The Summit) with Discovery Land Company (Discovery) to develop a custom home community in Summerlin. Phase I The Company contributed land with a carrying value of $13.4 million and transferred SID bonds related to such land with a carrying value of $1.3 million to The Summit at the agreed upon capital contribution value of $125.4 million, or $226,000 per acre, and has no further capital obligations. Discovery is required to fund up to a maximum of $30.0 million of cash as their capital contribution, of which $3.8 million has been contributed. The gains on the contributed land are recognized in Equity in earnings (losses) from unconsolidated ventures as The Summit sells lots. The Company has received its preferred return distributions and recognizes its share of income or loss for Phase I based on its final profit-sharing interest. Phase II In July 2022, the Company contributed an additional 54 acres to The Summit (Phase II land) with a fair value of $21.5 million. The Company recognized an incremental equity method investment at fair value and recognized a gain of $13.5 million recorded in Equity in earnings (losses) from unconsolidated ventures. This gain is the result of marking the cost basis of the land contributed to its estimated fair value at the time of contribution. The Phase II land is adjacent to the existing Summit development and includes approximately 28 custom home sites. The first lot sales closed in the first quarter of 2023. The Company will receive distributions and recognize its share of income or loss for Phase II based on the joint venture’s distribution priorities in the amended Summit LLC agreement, which could fluctuate over time. Upon receipt of the Company’s preferred returns, distributions and recognition of income or loss will be allocated to the Company based on its final profit-sharing interest. Floreo In the fourth quarter of 2021, simultaneous with the Teravalis land acquisition, the Company closed on the acquisition of a 50% interest in Trillium Development Holding Company, LLC (Floreo) for $59.0 million and entered into a Limited Liability Company Agreement (LLC Agreement) with JDM Partners and El Dorado Holdings to develop Floreo, the first village within the new Teravalis MPC, on 3,029 acres of land in the greater Phoenix, Arizona area. The first Floreo land sales are expected to occur in the fourth quarter of 2023 subject to market conditions. In October 2022, Floreo closed on a $165.0 million financing, with outstanding borrowings of $65.4 million as of September 30, 2023. The Company provided a guarantee on this financing in the form of a collateral maintenance obligation and received a guarantee fee of $5.0 million. The financing and related guarantee provided by the Company triggered a reconsideration event and as of December 31, 2022, Floreo was classified as a VIE. Due to rights held by other members, the Company does not have a controlling financial interest in Floreo and is not the primary beneficiary. As of September 30, 2023, the Company’s maximum exposure to loss on this investment is limited to the $56.5 million aggregate carrying value as the Company has not made any other firm commitments to fund amounts on behalf of this VIE. See Note 9 - Commitments and Contingencies for additional information related to the Company’s collateral maintenance obligation. West End Alexandria In the fourth quarter of 2021, the Company entered into an Asset Contribution Agreement with Landmark Land Holdings, LLC (West End Alexandria) to redevelop a 52-acre site previously known as Landmark Mall. Other equity owners include Foulger-Pratt Development, LLC (Foulger-Pratt) and Seritage SRC Finance (Seritage). The Company conveyed its 33-acre Landmark Mall property with an agreed upon fair value of $56.0 million and Seritage conveyed an additional 19 acres of land with an agreed upon fair value of $30.0 million to West End Alexandria in exchange for equity interest. Additionally, Foulger-Pratt agreed to contribute $10.0 million to West End Alexandria. Also in the fourth quarter of 2021, West End Alexandria executed a Purchase and Sale Agreement with the City of Alexandria to sell approximately 11 acres to the City of Alexandria. The City will lease this land to Inova Health Care Services for construction of a new hospital. Development plans for the remaining 41-acre property include approximately four million square feet of residential, retail, commercial, and entertainment offerings integrated into a cohesive neighborhood with a central plaza, a network of parks and public transportation. Foulger-Pratt will manage construction of the development. Demolition began in the second quarter of 2022, with completion of the first buildings expected in 2025. The Company does not have the ability to control the activities that most impact the economic performance of the venture as Foulger-Pratt is the managing member and manages all development activities. As such, the Company accounts for its ownership interest in accordance with the equity method.
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Acquisitions and Dispositions |
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Sep. 30, 2023 | |||||||
Acquisitions And Dispositions [Abstract] | |||||||
Acquisitions and Dispositions |
Acquisitions In May 2023, the Company acquired the Grogan’s Mill Village Center and related anchor site, a retail property in The Woodlands, Texas consisting of approximately 8.7 acres for $5.9 million in an asset acquisition. The property is being held in the Strategic Developments segment. In March 2022, the Company acquired a 25% interest in Jean-Georges Restaurants for $45.0 million and paid $10.0 million for the option to acquire up to an additional 20% interest in Jean-Georges Restaurants through March 2026. Jean-Georges Restaurants currently has over 40 hospitality offerings and a pipeline of new concepts. See Note 2 - Investments in Unconsolidated Ventures for additional information. Teravalis In October 2021, the Company acquired Teravalis, a new large-scale master planned community in the West Valley of Phoenix, Arizona. The Company closed on the all-cash purchase of approximately 33,810 acres (Teravalis Property) for a purchase price of $541.0 million. The executed purchase and sale agreement included a repurchase option that allowed the seller, or permitted assignee, to repurchase up to 50% interest in the Teravalis Property within a set term. In June 2022, the seller’s assignee, JDM Member, exercised a minimum purchase option and purchased a 9.24% interest in the Teravalis Property for $50.0 million. Additionally, in August 2022, JDM Member purchased an additional 2.78% interest in the Teravalis Property for $15.0 million, after which the remaining repurchase option expired. Following the execution of the minimum purchase option, the Company entered into a Limited Liability Company Agreement (LLC Agreement) with JDM Member to form Douglas Ranch Development Holding Company (Teravalis). The Company and JDM Member then contributed their interests in the Teravalis Property to Teravalis in exchange for an equity interest. At September 30, 2023, the Company holds 88.0% of the Teravalis interests and JDM Member holds the remaining 12.0%. Teravalis was determined to be a VIE, and as the Company has the power to direct the activities that most significantly impact its economic performance, the Company is considered the primary beneficiary and continues to consolidate Teravalis. Under the terms of the LLC agreement, cash distributions and the recognition of income-producing activities will be pro rata based on economic ownership interest. As of September 30, 2023, the Company’s Condensed Consolidated Balance Sheets include $541.4 million of Master Planned Community assets, $0.3 million of Accounts Payable and other liabilities, and $65.0 million of Noncontrolling interest related to Teravalis. Floreo Simultaneous with the Teravalis land acquisition, the Company closed on the acquisition of a 50% interest in Trillium Development Holding Company, LLC (Floreo), for $59.0 million. Floreo owns approximately 3,029 acres of land which will be the first village developed within the Teravalis community in the greater Phoenix, Arizona area. See Note 2 - Investments in Unconsolidated Ventures for additional information. Dispositions Gains and losses on asset dispositions are recorded to Gain (loss) on sale or disposal of real estate and other assets, net in the Condensed Consolidated Statements of Operations, unless otherwise noted. Operating Assets On July 6, 2023, the Company completed the sale of two self-storage facilities with a total of 1,370 storage units in The Woodlands, Texas, for $30.5 million resulting in a gain of $16.1 million. On March 31, 2023, the Company completed the sale of two land parcels in Honolulu, Hawai‘i, including an 11,929-square-foot building at the Ward Village Retail property, for total consideration of $6.3 million, resulting in a gain of $4.7 million. On December 30, 2022, the Company completed the sale of Creekside Village Green, a 74,670-square-foot retail property in The Woodlands, Texas, for $28.4 million resulting in a gain of $13.4 million. On December 21, 2022, the Company completed the sale of Lake Woodlands Crossing, a 60,261-square-foot retail property in The Woodlands, Texas, for $22.5 million resulting in a gain of $12.2 million. The Company retained the underlying land and simultaneously with the sale executed a 99-year ground lease with the buyer, which is classified as an operating lease. On June 16, 2022, the Company completed the sale of the Outlet Collection at Riverwalk, a 264,080-square-foot outlet center located in downtown New Orleans, Louisiana, for $34.0 million resulting in a gain on sale of $4.0 million, inclusive of $0.5 million in related transaction costs. On March 30, 2022, the Company completed the sale of its ownership interest in 110 North Wacker for $208.6 million. See Note 2 - Investments in Unconsolidated Ventures for additional information.
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Impairment |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment |
The Company reviews its long-lived assets for potential impairment indicators whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment or disposal of long‑lived assets in accordance with ASC 360 requires that if impairment indicators exist and expected undiscounted cash flows generated by the asset over an anticipated holding period are less than its carrying amount, an impairment provision should be recorded to write down the carrying amount of the asset to its fair value. The impairment analysis does not consider the timing of future cash flows and whether the asset is expected to earn an above- or below-market rate of return. The Company evaluates each investment in an unconsolidated venture discussed in Note 2 - Investments in Unconsolidated Ventures periodically for recoverability and valuation declines that are other-than-temporary. If the decrease in value of an investment is deemed to be other-than-temporary, the investment is reduced to its estimated fair value. During the third quarter of 2023, the Company recorded a $709.5 million impairment charge related to the Seaport segment. The Company recognized the impairment due to decreases in estimated future cash flows due to significant uncertainty of future performance as stabilization and profitability are taking longer than expected, pressure on the current cost structure, decreased demand for office space, as well as an increase in the capitalization rate and a decrease in restaurant multiples used to evaluate future cash flows. The Company used a discounted cash flow analysis to determine fair value, with capitalization rates ranging from 6.5% to 6.75%, discount rates ranging from 9.5% to 13.3%, and restaurant multiples ranging from 8.3 to 11.8. The assumptions and estimates included in the Company’s impairment analysis require significant judgment about future events, market conditions, and financial performance. Actual results may differ from these assumptions. There can be no assurance that these estimates and assumptions will prove to be an accurate prediction of the future. Additional adjustments may be recorded for subsequent revisions in estimated fair value. The following table summarizes the pre-tax impacts of the Seaport impairment mentioned above to the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023.
No impairment charges were recorded during the three and nine months ended September 30, 2022.
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Other Assets and Liabilities |
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OTHER ASSETS AND LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets and Liabilities |
Other Assets, Net The following table summarizes the significant components of other assets:
Accounts Payable and Other Liabilities The following table summarizes the significant components of Accounts payable and other liabilities:
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Mortgages, Notes and Loans Payable, Net |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mortgages, Notes and Loans Payable, Net |
Mortgages, Notes, and Loans Payable, Net Mortgages, notes, and loans payable, net are summarized as follows:
(a)The Company has entered into derivative instruments to manage the variable interest rate exposure. The Company had an interest rate swap and two interest rate caps that expired in the third quarter of 2023. See Note 8 - Derivative Instruments and Hedging Activities for additional information. (b)Deferred financing costs are amortized to interest expense over the initial contractual term of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method). As of September 30, 2023, land, buildings and equipment, developments, and other collateral with a net book value of $4.8 billion have been pledged as collateral for the Company’s mortgages, notes, and loans payable. Senior Unsecured Notes During 2020 and 2021, the Company issued $2.1 billion of aggregate principal of senior unsecured notes. These notes have fixed rates of interest that are payable semi-annually and are interest only until maturity. These debt obligations are redeemable prior to the maturity date subject to a “make-whole” premium which decreases annually until 2026 at which time the redemption make-whole premium is no longer applicable. The following table summarizes the Company’s senior unsecured notes by issuance date:
Secured Mortgages Payable The Company’s outstanding mortgages are collateralized by certain of the Company’s real estate assets. Certain of the Company’s loans contain provisions that grant the lender a security interest in the operating cash flow of the property that represents the collateral for the loan. Certain mortgage notes may be prepaid subject to a prepayment penalty equal to a yield maintenance premium, defeasance, or a percentage of the loan balance. Construction loans related to the Company’s development properties are generally variable-rate, interest-only, and have maturities of five years or less. Debt obligations related to the Company’s operating properties generally require monthly installments of principal and interest over its contractual life. The following table summarizes the Company’s Secured mortgages payable:
(a)Interest rates presented are based upon the coupon rates of the Company’s fixed-rate debt obligations. (b)Interest rates presented are based on the applicable reference interest rates as of September 30, 2023, and December 31, 2022, excluding the effects of interest rate derivatives. The Company has entered into derivative instruments to manage its variable interest rate exposure. The weighted-average interest rate of the Company’s variable-rate mortgages payable, inclusive of interest rate derivatives, was 7.86% as of September 30, 2023, and 5.91% as of December 31, 2022. See Note 8 - Derivative Instruments and Hedging Activities for additional information. The Company’s secured mortgages mature over various terms through December 2039. On certain of its debt obligations, the Company has the option to exercise extension options, subject to certain terms, which may include minimum debt service coverage, minimum occupancy levels or condominium sales levels, as applicable, and other performance criteria. In certain cases, due to property performance not meeting identified covenants, the Company may be required to pay down a portion of the loan to exercise the extension option. During 2023, the Company’s mortgage activity included new borrowings of $115.0 million (excluding undrawn amounts on new construction loans), draws on existing mortgages of $244.3 million, and repayments of $110.8 million. As of September 30, 2023, the Company’s secured mortgage loans had $1.1 billion of undrawn lender commitment available to be drawn for property development, subject to certain restrictions. Special Improvement District Bonds The Summerlin MPC uses SID bonds to finance certain common infrastructure improvements. These bonds are issued by the municipalities and are secured by the assessments on the land. The majority of proceeds from each bond issued is held in a construction escrow and disbursed to the Company as infrastructure projects are completed, inspected by the municipalities, and approved for reimbursement. Accordingly, the SID bonds have been classified as debt, and the Summerlin MPC pays the debt service on the bonds semi‑annually. As Summerlin sells land, the buyers assume a proportionate share of the bond obligation at closing, and the residential sales contracts provide for the reimbursement of the principal amounts that the Company previously paid with respect to such proportionate share of the bond. These bonds bear interest at fixed rates ranging from 4.13% to 6.05% with maturities ranging from 2025 to 2051 as of September 30, 2023. During the nine months ended September 30, 2023, $3.1 million obligations were assumed by buyers and no SID bonds were issued. Secured Bridgeland Notes In September 2021, the Company closed on a $275.0 million financing with maturity in 2026. This financing is secured by MUD receivables and land in Bridgeland. The loan required a $27.5 million fully refundable deposit and has an interest rate of 7.62% at September 30, 2023, and 6.60% at December 31, 2022. Due to the maturity of one of the Company’s interest rate swaps in September 2023, this financing was not covered by an interest rate derivative at September 30, 2023. The interest rate inclusive of interest rate derivatives was 5.28% at December 31, 2022. In December 2022, the borrowing capacity of this obligation was expanded from $275.0 million to $475.0 million. An additional $67.0 million was drawn in the second quarter of 2023 and $133.0 million was drawn in the third quarter of 2023, bringing outstanding borrowings to $475.0 million as of September 30, 2023. Debt Compliance As of September 30, 2023, the Company was in compliance with all property-level debt covenants with the exception of six property-level debt instruments. As a result, the excess net cash flow after debt service from the underlying properties became restricted. While the restricted cash could not be used for general corporate purposes, it could be used to fund operations of the underlying assets and did not have a material impact on the Company’s liquidity or its ability to operate these assets. As of September 30, 2023, the Company was in compliance with all guarantor debt covenants tested as of the last day of each fiscal quarter with the exception of the leverage ratio covenant for an $11.0 million property-level debt instrument. As of September 30, 2023, the Company failed to satisfy the leverage ratio due to the Seaport impairment discussed in Note 4 - Impairment. The financial institution waived the failure.
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Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
ASC 820, Fair Value Measurement, emphasizes that fair value is a market-based measurement that should be determined using assumptions market participants would use in pricing an asset or liability. The standard establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets or liabilities at fair value. Market price observability is impacted by a number of factors, including the type of investment and the characteristics specific to the asset or liability. Assets or liabilities with readily available active quoted prices, or for which fair value can be measured from actively quoted prices, generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. The following table presents the fair value measurement hierarchy levels required under ASC 820 for the Company’s assets that are measured at fair value on a recurring basis. The Company does not have any liabilities that are measured at a fair value on a recurring basis for the periods presented:
The fair values of interest rate derivatives are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts. The variable cash receipts are based on an expectation of future interest rates derived from observable market interest rate curves. The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis are as follows:
(a)Accounts receivable, net is shown net of an allowance of $11.4 million at September 30, 2023, and $8.9 million at December 31, 2022. Refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies for additional information on the allowance. (b)Notes receivable, net is shown net of an immaterial allowance at September 30, 2023, and December 31, 2022. (c)Excludes related unamortized financing costs. The carrying amounts of Cash and Restricted cash, Accounts receivable, net, and Notes receivable, net approximate fair value because of the short‑term maturity of these instruments. The fair value of the Company’s Senior Notes, included in fixed-rate debt in the table above, is based upon the trade price closest to the end of the period presented. The fair value of other fixed-rate debt in the table above was estimated based on a discounted future cash payment model, which includes risk premiums and risk-free rates derived from the Secured Overnight Financing Rate (SOFR) or U.S. Treasury obligation interest rates as of September 30, 2023. Please refer to Note 6 - Mortgages, Notes, and Loans Payable, Net for additional information. The discount rates reflect the Company’s judgment as to what the approximate current lending rates for loans or groups of loans with similar maturities and credit quality would be if credit markets were operating efficiently and assuming that the debt is outstanding through maturity. The carrying amounts for the Company’s variable-rate debt approximate fair value given that the interest rates are variable and adjust with current market rates for instruments with similar risks and maturities. The below table includes a non-financial asset that was measured at fair value on a non-recurring basis resulting in the property being impaired:
(a)The fair value was measured as of the impairment date in the third quarter of 2023 using a discounted cash flow analysis to determine fair value, with capitalization rates ranging from 6.5% to 6.75%, discount rates ranging from 9.5% to 13.3%, and restaurant multiples ranging from 8.3 to 11.8. Refer to Note 4 - Impairment for additional information.
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Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities |
The Company is exposed to interest rate risk related to its variable interest rate debt, and it manages this risk by utilizing interest rate derivatives. The Company uses interest rate swaps, collars, and caps to add stability to interest costs by reducing the Company’s exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company’s fixed‑rate payments over the life of the agreements without exchange of the underlying notional amount. Interest rate collars designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above an established ceiling rate and payment of variable amounts to a counterparty if interest rates fall below an established floor rate, in exchange for an up‑front premium. No payments or receipts are exchanged on interest rate collar contracts unless interest rates rise above or fall below the established ceiling and floor rates. Interest rate caps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract in exchange for an upfront premium. Certain of the Company’s interest rate caps are not currently designated as hedges, and therefore, any gains or losses are recognized in current-period earnings within Interest expense on the Condensed Consolidated Statements of Operations. These derivatives are recorded on a gross basis at fair value on the balance sheet. Assessments of hedge effectiveness are performed quarterly using regression analysis. The change in the fair value of derivatives designated and qualifying as cash flow hedges is recorded in Accumulated other comprehensive income (loss) (AOCI) and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings within the same income statement line item being hedged. Derivatives accounted for as cash flow hedges are classified in the same category in the Condensed Consolidated Statements of Cash Flows as the items being hedged. Gains and losses from derivative financial instruments are reported in Cash provided by (used in) operating activities within the Condensed Consolidated Statements of Cash Flows. The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. To mitigate its credit risk, the Company reviews the creditworthiness of counterparties and enters into agreements with those that are considered credit-worthy, such as large financial institutions with favorable credit ratings. There were no derivative counterparty defaults as of September 30, 2023, or as of December 31, 2022. If the derivative contracts are terminated prior to their maturity, the amounts previously recorded in AOCI are recognized in earnings over the period that the hedged transaction impacts earnings. During the nine months ended September 30, 2023, and the year ended December 31, 2022, there were no termination events. The Company recorded an immaterial reduction in Interest expense in 2022 and 2023 related to the amortization of a previously terminated swap. Amounts reported in AOCI related to derivatives will be reclassified to Interest expense as interest payments are made on the Company’s variable‑rate debt. Over the next 12 months, the Company estimates that $6.4 million of net gain will be reclassified to Interest expense including amounts related to the amortization of terminated swaps. The following table summarizes certain terms of the Company’s derivative contracts. The Company reports derivative assets in Other assets, net and derivative liabilities in Accounts payable and other liabilities.
(a)These rates represent the swap rate and cap strike rate on the Company’s interest rate swaps, caps, and collars. (b)Interest income related to these contracts was $1.5 million for the three months ended September 30, 2023, and $3.6 million for the nine months ended September 30, 2023, and interest income was $5.9 million for the three months ended September 30, 2022, and $14.1 million for the nine months ended September 30, 2022. The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022:
Credit-risk-related Contingent Features The Company has agreements at the property level with certain derivative counterparties that contain a provision where if the Company defaults on the related property level indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its related derivative obligations. The Company also has agreements at the property level with certain derivative counterparties that contain a provision where the Company could be declared in default on its derivative obligations if repayment of the underlying indebtedness is accelerated by the lender due to the Company’s default on the indebtedness. None of the Company’s derivatives which contain credit-risk-related features were in a net liability position as of September 30, 2023.
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Commitments and Contingencies |
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Sep. 30, 2023 | |||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||
Commitments and Contingencies |
Litigation In the normal course of business, from time to time, the Company is involved in legal proceedings relating to the ownership and operations of its properties. In management’s opinion, the liabilities, if any, that may ultimately result from normal course of business legal actions are not expected to have a material effect on the Company’s consolidated financial position, results of operations or liquidity. Timarron Park On June 14, 2018, the Company was served with a petition involving approximately 500 individuals or entities who claim that their properties, located in the Timarron Park neighborhood of The Woodlands, were damaged by flood waters that resulted from the unprecedented rainfall that occurred throughout Harris County and surrounding areas during Hurricane Harvey in August 2017. The complaint was filed in State Court in Harris County of the State of Texas. In general, the plaintiffs alleged negligence in the development of Timarron Park and violations of Texas’ Deceptive Trade Practices Act and named as defendants The Howard Hughes Corporation, The Woodlands Land Development Company, and two unaffiliated parties involved in the planning and engineering of Timarron Park. The plaintiffs are seeking restitution for damages to their property and diminution of their property values. On August 9, 2022, the Court granted the Company’s summary judgment motions and dismissed the plaintiffs’ claims. On September 8, 2022, the plaintiffs filed a motion for a new trial. On October 21, 2022, the Court denied the motion for a new trial. On November 7, 2022, the Plaintiffs filed their notice of appeal, and the appeal has been assigned to the First District Court of Appeals. The Company will continue to vigorously defend the matter as it believes that these claims are without merit and that it has substantial legal and factual defenses to the claims and allegations contained in the complaint. Based upon the present status of this matter, the Company does not believe it is probable that a loss will be incurred. Accordingly, the Company has not recorded any reserves or contingencies related to this legal matter. Waiea The Company entered into a settlement agreement with the Waiea homeowners association related to certain construction defects at the condominium tower. Pursuant to the settlement agreement, the Company will pay for the repair of the defects. The Company believes that the general contractor is ultimately responsible for the defects and as such the Company should be entitled to recover all the repair costs from the general contractor, other responsible parties, and insurance proceeds; however, the Company can provide no assurances that all or any portion of the costs will be recovered. Total estimated cost related to the remediation is $155.4 million, inclusive of $16.1 million of additional anticipated costs recognized in 2023. As of September 30, 2023, a total of $11.7 million remains in Construction payables for the estimated repair costs related to this matter, which is included in Accounts payable and other liabilities in the accompanying Condensed Consolidated Balance Sheets. 250 Water Street In 2021, the Company received the necessary approvals for its 250 Water Street development project, which includes a mixed-use development with affordable and market-rate apartments, community-oriented spaces, and office space. In May 2021, the Company received approval from the New York City Landmarks Preservation Commission (LPC) on its proposed design for the 250 Water Street site. The Company received final approvals in December 2021 through the New York City Uniform Land Use Review Procedure known as ULURP, which allowed the necessary transfer of development rights to the parking lot site. The Company began initial foundation and voluntary site remediation work in the second quarter of 2022. The Company has prevailed in various lawsuits filed in 2021 and 2022 challenging the zoning and development approvals in order to prevent construction of this project. In September 2021, the New York State Supreme Court dismissed on procedural grounds a lawsuit challenging the LPC approval. In February 2022, an additional lawsuit was filed in New York State Supreme Court by opponents of the project challenging the land use approvals for 250 Water Street previously granted to the Company under the ULURP, and in August 2022 the Court ruled in the Company’s favor, denying all claims of the petitioners. The same petitioners subsequently filed a request to reargue and renew the case, which the Court rejected in January 2023. A separate lawsuit was filed in July 2022 again challenging the Landmarks Preservation Commission approval. In January 2023, a Court ruled in favor of the petitioners vacating the Certificate of Appropriateness (COA) issued by the LPC. The Company immediately appealed this decision to the New York State Supreme Court’s Appellate Division and on June 6, 2023, an Appellate Division panel of five judges unanimously reversed the lower Court’s decision, reinstating the COA. Subsequently, on June 29, 2023, petitioners filed a motion requesting reargument or, in the alternative, permission to appeal the decision of the Appellate Division to the New York State Court of Appeals. On August 31, 2023, the Appellate denied petitioners’ motion in full. Subsequently, petitioners filed a motion in the Court of Appeals for permission to appeal to that court. The decision on the motion by the Court of Appeals is pending. Although it is not possible to predict with certainty the outcome of petitioners’ motion, such requests are rarely granted and there is no further judicial recourse after the Court of Appeals. If the pending motion for permission to appeal were to be granted by the Court of Appeals, the Company believes the Appellate Division’s ruling will be upheld based on the substantial legal and factual arguments supporting its decision. The lawsuit is not seeking monetary damages as the petitioners are seeking to enjoin the Company from moving forward with the development of 250 Water Street. Because the Company believes that a potential loss is not probable or estimable, it has not recorded any reserves or contingencies related to this legal matter. Letters of Credit and Surety Bonds As of September 30, 2023, the Company had outstanding letters of credit totaling $3.9 million and surety bonds totaling $456.9 million. As of December 31, 2022, the Company had outstanding letters of credit totaling $2.1 million and surety bonds totaling $346.3 million. These letters of credit and surety bonds were issued primarily in connection with insurance requirements, special real estate assessments, and construction obligations. Operating Leases The Company leases land or buildings at certain properties from third parties, which are recorded in Operating lease right-of-use assets, net and Operating lease obligations on the Condensed Consolidated Balance Sheets. See Note 14 - Leases for further discussion. Contractual rental expense, including participation rent, was $1.3 million for the three months ended September 30, 2023 and $4.0 million for the nine months ended September 30, 2023, compared to $1.2 million for the three months ended September 30, 2022 and $4.4 million for the nine months ended September 30, 2022. The amortization of above and below‑market ground leases and straight‑line rents included in the contractual rent amount was not significant. Guarantee Agreements In October 2022, Floreo, the Company’s 50%-owned joint venture in Teravalis, closed on a $165 million bond financing with Mizuho Capital Markets, LLC (Mizuho), with outstanding borrowings of $65.4 million as of September 30, 2023. A wholly owned subsidiary of the Company (HHC Member) provided a guarantee for the bond in the form of a collateral maintenance commitment under which it will post refundable cash collateral if the Loan-to-Value (LTV) ratio exceeds 50%. A separate wholly owned subsidiary of the Company also provided a backstop guarantee of up to $50 million of the cash collateral commitment in the event HHC Member fails to make necessary payments when due. The cash collateral becomes nonrefundable if Floreo defaults on the bond obligation. The Company received a fee of $5.0 million in exchange for providing this guarantee, which was recognized in Accounts payable and other liabilities on the Condensed Consolidated Balance Sheets as of September 30, 2023, and December 31, 2022. This liability amount will be recognized in Other income (loss), net in a manner that corresponds to the bond repayment by Floreo. The Company’s maximum exposure under this guarantee is equal to the cash collateral that the Company may be obligated to post. As of September 30, 2023, the Company has not posted any cash collateral. Given the existence of other collateral including the undeveloped land owned by Floreo, the entity’s extensive and discretionary development plan, and its eligibility for reimbursement of a significant part of the development costs from the Community Facility District in Arizona, the Company does not expect to have to post collateral. In conjunction with the execution of the ground lease for the Seaport, the Company executed a completion guarantee for the core and shell construction of the Tin Building. The core and shell construction was completed in the fourth quarter of 2021, and the remainder of construction was completed in the third quarter of 2022. The Company received the necessary approvals from the New York City Economic Development Corporation to relinquish the guarantee in early 2023. As part of the Company’s development permits with the Hawai‘i Community Development Authority for the condominium towers at Ward Village, the Company entered into a guarantee whereby it is required to reserve 20% of the residential units for local residents who meet certain maximum income and net worth requirements. This guarantee, which is triggered once the necessary permits are granted and construction commences, was satisfied for Waiea, Anaha, and Ae`o, with the opening of Ke Kilohana, which is a workforce tower fully earmarked to fulfill this obligation for the first four towers. The reserved units for ‘A‘ali‘i tower are included in the ‘A‘ali‘i tower. Units for Kō'ula, Victoria Place, and The Park Ward Village will be satisfied with the construction of Ulana Ward Village, which is a second workforce tower fully earmarked to satisfy the remaining reserved housing guarantee in the community. Ulana Ward Village began construction in early 2023. The Company evaluates the likelihood of future performance under these guarantees and, as of September 30, 2023, and December 31, 2022, there were no events requiring financial performance under these guarantees.
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Income Taxes |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes |
The Company’s tax provision for interim periods is determined using an estimate of its annual current and deferred effective tax rates, adjusted for discrete items. The Company’s effective tax rate is typically impacted by non-deductible executive compensation and other permanent differences as well as state income taxes, which cause the Company’s effective tax rate to deviate from the federal statutory rate.
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Accumulated Other Comprehensive Income (Loss) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) |
The following tables summarize changes in AOCI, all of which are presented net of tax:
(a)In March 2022, the Company completed the sale of its ownership interest in 110 North Wacker and released a net of $6.7 million from Accumulated other comprehensive income (loss), representing the Company’s $8.6 million share of previously deferred gains associated with the Venture’s derivative instruments net of tax expense of $1.9 million. See Note 2 - Investments in Unconsolidated Ventures for additional information. The following table summarizes the amounts reclassified out of AOCI:
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Common Stock and Equity |
9 Months Ended | ||||||
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Sep. 30, 2023 | |||||||
Equity [Abstract] | |||||||
Common Stock and Equity |
On August 11, 2023, upon the consummation of the holding company reorganization transaction, existing shares of common stock of HHC were automatically converted, on a one-for-one basis, into shares of common stock of HHH, the new parent holding company, with the same designations, rights, powers, and preferences, and the same qualifications, limitations, and restrictions, as the shares of HHC common stock immediately prior to the reorganization. As a result of the reorganization, HHC recorded various intercompany activities during the third quarter ended September 30, 2023, as capital transactions, which are reflected in HHC’s Condensed Consolidated Statement of Equity. Additionally, in connection with the holding company reorganization, HHC transferred to HHH, and HHH assumed, sponsorship of all of HHC’s stock plans along with all of HHC’s rights and obligations under each plan. Subsequent to the reorganization, stock-based compensation associated with HHH equity awards granted and outstanding to HHC employees is reflected as capital contributions from HHH to HHC. Net income (loss) per share for HHC is no longer required, as its shares are not publicly traded, and HHC is now a direct, wholly owned subsidiary of HHH.
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Revenues |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues |
Revenues from contracts with customers (excluding lease-related revenues) are recognized when control of the promised goods or services is transferred to the Company’s customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Revenue and cost of sales for condominium units sold are not recognized until the construction is complete, the sale closes, and the title to the property has transferred to the buyer (point in time). Additionally, certain real estate selling costs, such as the costs related to the Company’s condominium model units, are either expensed immediately or capitalized as property and equipment and depreciated over their estimated useful life. The following presents the Company’s revenues disaggregated by revenue source:
Contract Assets and Liabilities Contract assets are the Company’s right to consideration in exchange for goods or services that have been transferred to a customer, excluding any amounts presented as a receivable. Contract liabilities are the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration. There were no contract assets for the periods presented. The contract liabilities primarily relate to escrowed condominium deposits, MPC land sales deposits, and deferred MPC land sales related to unsatisfied land improvements. The beginning and ending balances of contract liabilities and significant activity during the periods presented are as follows:
Remaining Unsatisfied Performance Obligations The Company’s remaining unsatisfied performance obligations represent a measure of the total dollar value of work to be performed on contracts executed and in progress. These performance obligations primarily relate to the completion of condominium construction and transfer of control to a buyer, as well as the completion of contracted MPC land sales and related land improvements. These obligations are associated with contracts that generally are non-cancelable by the customer after 30 days; however, purchasers of condominium units have the right to cancel the contract should the Company elect not to construct the condominium unit within a certain period of time or materially change the design of the condominium unit. The aggregate amount of the transaction price allocated to the Company’s remaining unsatisfied performance obligations as of September 30, 2023, is $2.8 billion. The Company expects to recognize this amount as revenue over the following periods:
The Company’s remaining performance obligations are adjusted to reflect any known project cancellations, revisions to project scope and cost, and deferrals, as appropriate. These amounts exclude estimated amounts of variable consideration which are constrained, such as builder price participation.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
Lessee Arrangements The Company determines whether an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-use assets, net and Operating lease obligations on the Condensed Consolidated Balance Sheets. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of future minimum lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an estimate of the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of future lease payments. The Operating lease right-of-use asset also includes any lease payments made, less any lease incentives and initial direct costs incurred. The Company does not have any finance leases as of September 30, 2023, or December 31, 2022. The Company’s lessee agreements consist of operating leases primarily for ground leases and other real estate. The Company’s leases have remaining lease terms of less than 2 years to approximately 50 years, excluding extension options. The Company considers its strategic plan and the life of associated agreements in determining when options to extend or terminate lease terms are reasonably certain of being exercised. Leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Certain of the Company’s lease agreements include variable lease payments based on a percentage of income generated through subleases, changes in price indices and market rates, and other costs arising from operating, maintenance, and taxes. The Company’s lease agreements do not contain residual value guarantees or restrictive covenants. The Company leases certain buildings and office space constructed on its ground leases to third parties. In June 2022, the Company sold the Outlet Collection at Riverwalk, which was subject to a ground lease, resulting in a reduction in the Company’s operating lease right-of-use assets and obligations as well as future minimum lease payments. The Company’s operating leases primarily relate to the Seaport ground leases. The Company’s leased assets and liabilities are as follows:
The components of lease expense are as follows:
Future minimum lease payments as of September 30, 2023, are as follows:
Other information related to the Company’s lessee agreements is as follows:
Lessor Arrangements The Company receives rental income from the leasing of retail, office, multi-family, and other space under operating leases, as well as certain variable tenant recoveries. Such operating leases are with a variety of tenants and have a remaining average term of approximately four years. Lease terms generally vary among tenants and may include early termination options, extension options, and fixed rental rate increases or rental rate increases based on an index. Minimum rent revenues related to operating leases are as follows:
Total future minimum rents associated with operating leases are as follows as of September 30, 2023:
Minimum rent revenues are recognized on a straight‑line basis over the terms of the related leases when collectability is reasonably assured and the tenant has taken possession of, or controls, the physical use of the leased asset. Percentage rent in lieu of fixed minimum rent is recognized as sales are reported from tenants. Minimum rent revenues reported on the Condensed Consolidated Statements of Operations also include amortization related to above and below‑market tenant leases on acquired properties.
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments |
The Company has four business segments that offer different products and services. HHC’s four segments are managed separately because each requires different operating strategies or management expertise and are reflective of management’s operating philosophies and methods. Because the Company’s four segments, Operating Assets, MPC, Seaport, and Strategic Developments, are managed separately, the Company uses different operating measures to assess operating results and allocate resources among them. The one common operating measure used to assess operating results for the Company’s business segments is earnings before tax (EBT). EBT, as it relates to each business segment, includes the revenues and expenses of each segment, as shown below. EBT excludes corporate expenses and other items that are not allocable to the segments. The Company presents EBT for each segment because the Company uses this measure, among others, internally to assess the core operating performance of the Company’s assets. The Company’s segments or assets within such segments could change in the future as development of certain properties commences or other operational or management changes occur. All operations are within the United States. The Company’s reportable segments are as follows: –Operating Assets – consists of developed or acquired retail, office, and multi-family properties along with other real estate investments. These properties are currently generating revenues and may be redeveloped, repositioned, or sold to improve segment performance or to recycle capital. –MPC – consists of the development and sale of land in large‑scale, long‑term community development projects in and around Las Vegas, Nevada; Houston, Texas; and Phoenix, Arizona. –Seaport – consists of approximately 472,000 square feet of restaurant, retail, and entertainment properties situated in three primary locations in New York City: Pier 17, Historic Area/Uplands, and Tin Building as well as the 250 Water Street development, and equity interest in Jean-Georges Restaurants. –Strategic Developments – consists of residential condominium and commercial property projects currently under development and all other properties held for development which have no substantial operations. Segment operating results are as follows:
The assets by segment and the reconciliation of total segment assets to Total assets in the Condensed Consolidated Balance Sheets are summarized as follows:
(a)During the third quarter of 2023, the Company recorded a $709.5 million impairment charge related to the Seaport segment. Refer to Note 4 - Impairment for additional information.
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Presentation of Financial Statements and Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of The Howard Hughes Corporation and its subsidiaries after elimination of intercompany balances and transactions. The Company also consolidates certain variable interest entities (VIEs) in accordance with Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC) 810 Consolidation. The outside equity interests in certain entities controlled by the Company are reflected in the Condensed Consolidated Financial Statements as noncontrolling interests. HHC’s consolidated financial statements reflect the impacts of the holding company reorganization discussed above on a prospective basis. |
Restricted Cash | Restricted Cash Restricted cash reflects amounts segregated in escrow accounts in the name of the Company, primarily related to escrowed condominium deposits by buyers and other amounts related to taxes, insurance, and legally restricted security deposits and leasing costs |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable, net includes straight-line rent receivables, tenant receivables, and other receivables. On a quarterly basis, management reviews straight-line rent receivables and tenant receivables for collectability. As required under ASC 842 Leases, this analysis includes a review of past due accounts and considers factors such as the credit quality of tenants, current economic conditions, and changes in customer payment trends. When full collection of a lease receivable or future lease payment is deemed to be not probable, a reserve for the receivable balance is charged against rental revenue and future rental revenue is recognized on a cash basis. The Company also records reserves for estimated losses under ASC 450 Contingencies if the estimated loss amount is probable and can be reasonably estimated. |
Income Taxes | Income Taxes HHC is a directly owned subsidiary of HHH and will be included in Howard Hughes Holding Inc. and Subsidiaries’ U.S. Federal income tax return. The Company’s financial statements recognize the current and deferred income tax consequences that result from HHC’s activities during the current period pursuant to the provisions of ASC 740 Income Taxes as if the Company were a separate taxpayer rather than a member of Howard Hughes Holding Inc.’s consolidated income tax return group. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The estimates and assumptions include, but are not limited to, the future cash flows used in impairment analysis and fair value used in impairment calculations, allocation of capitalized development costs, provision for income taxes, recoverable amounts of receivables and deferred tax assets, initial valuations of tangible and intangible assets acquired, and the related useful lives of assets upon which depreciation and amortization is based. Estimates and assumptions have also been made with respect to future revenues and costs, and the fair value of warrants, debt, and options granted. In particular, Master Planned Communities (MPC) cost of sales estimates are highly judgmental as they are sensitive to cost escalation, sales price escalation, and lot absorption, which are subject to judgment and affected by expectations about future market or economic conditions. Actual results could differ from these and other estimates. |
Noncontrolling Interests | Noncontrolling Interests As of September 30, 2023, and December 31, 2022, noncontrolling interests primarily related to the 12.0% noncontrolling interest in Teravalis and the noncontrolling interest in the Ward Village Homeowners’ Associations (HOAs). All revenues and expenses related to the HOAs are attributable to noncontrolling interests and do not impact net income attributable to common stockholders. Refer to Note 3 - Acquisitions and Dispositions for additional information on Teravalis. |
Financial Instruments - Credit Losses | Financial Instruments - Credit Losses The Company is exposed to credit losses through the sale of goods and services to the Company’s customers. Receivables held by the Company primarily relate to short-term trade receivables and financing receivables, which include Municipal Utility District (MUD) receivables, Special Improvement District (SID) bonds, Tax Increment Financing (TIF) receivables, net investments in lease receivables, and notes receivable. The Company assesses its exposure to credit loss based on historical collection experience and future expectations by portfolio segment. Historical collection experience is evaluated on a quarterly basis by the Company. The amortized cost basis of financing receivables, consisting primarily of MUD receivables, totaled $658.5 million as of September 30, 2023, and $545.4 million as of December 31, 2022. The MUD receivable balance included accrued interest of $51.4 million as of September 30, 2023, and $36.4 million as of December 31, 2022. There has been no material activity in the allowance for credit losses for financing receivables for the nine months ended September 30, 2023, and 2022. Financing receivables are considered to be past due once they are 30 days contractually past due under the terms of the agreement. The Company does not have significant receivables that are past due or on nonaccrual status. There have been no significant write-offs or recoveries of amounts previously written off during the current period for financing receivables.
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Recently Issued Accounting Standards | Recently Issued Accounting Standards The following is a summary of recently issued accounting pronouncements which relate to the Company’s business. ASU 2020-04, Reference Rate Reform When certain conditions are met, the amendments in this Update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (LIBOR) or another reference rate expected to be discontinued because of reference rate reform. The amendments in this Update were initially effective as of March 12, 2020, through December 31, 2022. On December 21, 2022, the FASB issued Accounting Standards Update (ASU) 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which extends the period entities can utilize the reference rate reform relief guidance under ASU 2020-04, from December 31, 2022, to December 31, 2024. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company has elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedge transactions will be based matches the index on the corresponding derivatives. The application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur through the effective date of December 31, 2024.
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Presentation of Financial Statements and Significant Accounting Policies (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accounts Receivable, Net | The following table represents the components of Accounts receivable, net of amounts considered uncollectible, in the accompanying Condensed Consolidated Balance Sheets:
(a)As of September 30, 2023, the total reserve balance for amounts considered uncollectible was $11.4 million, comprised of $7.4 million related to ASC 842 and $4.0 million related to ASC 450. As of December 31, 2022, the total reserve balance was $8.9 million, comprised of $3.4 million related to ASC 842 and $5.5 million related to ASC 450.
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Summary of Impacts of the Asc 842 and Asc 450 Reserves in the Accompanying Condensed Consolidated Statement of Operations | The following table summarizes the impacts of the ASC 842 and ASC 450 reserves in the accompanying Condensed Consolidated Statements of Operations:
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Investments in Unconsolidated Ventures (Tables) |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity of Investments in Real Estate and Other Affiliates | Investments in unconsolidated ventures consist of the following:
(a)Ownership interests presented reflect the Company’s stated ownership interest or if applicable, the Company’s final profit-sharing interest after receipt of any preferred returns based on the venture’s distribution priorities. (b)The Metropolitan Downtown Columbia was in a deficit position of $9.4 million at September 30, 2023, and $9.0 million at December 31, 2022, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets. (c)M.flats/TEN.M was in a deficit position of $2.2 million at September 30, 2023, and $1.8 million at December 31, 2022, and presented in Accounts payable and other liabilities in the Condensed Consolidated Balance Sheets. (d)For these equity method investments, various provisions in the venture operating agreements regarding distributions of cash flow based on capital account balances, allocations of profits and losses, and preferred returns may result in the Company’s economic interest differing from its stated interest or final profit-sharing interest. For these investments, the Company recognizes income or loss based on the venture’s distribution priorities, which could fluctuate over time and may be different from its stated ownership or final profit-sharing interest. (e)Classified as a VIE; however, the Company is not the primary beneficiary and accounts for its investment in accordance with the equity method. Refer to discussion below for additional information. (f)These investments were impaired as part of the Seaport impairment recognized in the current period. Refer to specific investment discussion below and Note 4 - Impairment for additional details. (g)Other equity investments represent investments not accounted for under the equity method. The Company elected the measurement alternative as these investments do not have readily determinable fair values. There were no impairments, or upward or downward adjustments to the carrying amounts of these securities either during current year or cumulatively. As of September 30, 2023, Other equity investments primarily includes $10.0 million of warrants, which represents cash paid by the Company for the option to acquire additional ownership interest in Jean-Georges Restaurants. Refer to discussion below for additional details.
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Impairment (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of asset impairment charges | The following table summarizes the pre-tax impacts of the Seaport impairment mentioned above to the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023.
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Other Assets and Liabilities (Tables) |
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OTHER ASSETS AND LIABILITIES [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Significant Components of Other Assets | The following table summarizes the significant components of other assets:
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Summary of the Significant Components of Accounts Payable and Other Liabilities | The following table summarizes the significant components of Accounts payable and other liabilities:
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Mortgages, Notes and Loans Payable, Net (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary and Activity for Mortgages, Notes and Loans Payable | Mortgages, notes, and loans payable, net are summarized as follows:
(a)The Company has entered into derivative instruments to manage the variable interest rate exposure. The Company had an interest rate swap and two interest rate caps that expired in the third quarter of 2023. See Note 8 - Derivative Instruments and Hedging Activities for additional information. (b)Deferred financing costs are amortized to interest expense over the initial contractual term of the respective financing agreements using the effective interest method (or other methods which approximate the effective interest method).
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Schedule of Senior Unsecured Note | The following table summarizes the Company’s senior unsecured notes by issuance date:
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Schedule of Secured Mortgages Payable | The following table summarizes the Company’s Secured mortgages payable:
(a)Interest rates presented are based upon the coupon rates of the Company’s fixed-rate debt obligations. (b)Interest rates presented are based on the applicable reference interest rates as of September 30, 2023, and December 31, 2022, excluding the effects of interest rate derivatives.
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Assets Measured at Fair Value on a Recurring Basis | The following table presents the fair value measurement hierarchy levels required under ASC 820 for the Company’s assets that are measured at fair value on a recurring basis. The Company does not have any liabilities that are measured at a fair value on a recurring basis for the periods presented:
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Summary of Assets and Liabilities not Measured At Fair Value on a Recurring Basis | The estimated fair values of the Company’s financial instruments that are not measured at fair value on a recurring basis are as follows:
(a)Accounts receivable, net is shown net of an allowance of $11.4 million at September 30, 2023, and $8.9 million at December 31, 2022. Refer to Note 1 - Presentation of Financial Statements and Significant Accounting Policies for additional information on the allowance. (b)Notes receivable, net is shown net of an immaterial allowance at September 30, 2023, and December 31, 2022. (c)Excludes related unamortized financing costs.
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Summary of non-financial asset measured at fair value on a non-recurring basis | The below table includes a non-financial asset that was measured at fair value on a non-recurring basis resulting in the property being impaired:
(a)The fair value was measured as of the impairment date in the third quarter of 2023 using a discounted cash flow analysis to determine fair value, with capitalization rates ranging from 6.5% to 6.75%, discount rates ranging from 9.5% to 13.3%, and restaurant multiples ranging from 8.3 to 11.8. Refer to Note 4 - Impairment for additional information.
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Derivative Instruments and Hedging Activities (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Notional and Fair Value of Derivative Financial Instruments | The following table summarizes certain terms of the Company’s derivative contracts. The Company reports derivative assets in Other assets, net and derivative liabilities in Accounts payable and other liabilities.
(a)These rates represent the swap rate and cap strike rate on the Company’s interest rate swaps, caps, and collars. (b)Interest income related to these contracts was $1.5 million for the three months ended September 30, 2023, and $3.6 million for the nine months ended September 30, 2023, and interest income was $5.9 million for the three months ended September 30, 2022, and $14.1 million for the nine months ended September 30, 2022.
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Summary of Effect of Derivative Financial Instruments on the Condensed Consolidated Statements of Operations | The tables below present the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Effective Income Tax Rate Reconciliation |
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Accumulated Other Comprehensive Income (Loss) (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of AOCI | The following tables summarize changes in AOCI, all of which are presented net of tax:
(a)In March 2022, the Company completed the sale of its ownership interest in 110 North Wacker and released a net of $6.7 million from Accumulated other comprehensive income (loss), representing the Company’s $8.6 million share of previously deferred gains associated with the Venture’s derivative instruments net of tax expense of $1.9 million. See Note 2 - Investments in Unconsolidated Ventures for additional information.
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Summary of the Amounts Reclassified Out of Aoci | The following table summarizes the amounts reclassified out of AOCI:
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Revenues (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Revenue Disaggregated by Revenue Source | The following presents the Company’s revenues disaggregated by revenue source:
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Summary of Contract with Customer, Assets and Liabilities | The beginning and ending balances of contract liabilities and significant activity during the periods presented are as follows:
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Summary of Remaining Performance Obligation, Expected Timing of Satisfaction | The Company expects to recognize this amount as revenue over the following periods:
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Leased Assets and Liabilities | The Company’s leased assets and liabilities are as follows:
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Summary of Components of Lease Expense and Other Information | The components of lease expense are as follows:
Other information related to the Company’s lessee agreements is as follows:
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Summary of Future Minimum Lease Payments | Future minimum lease payments as of September 30, 2023, are as follows:
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Summary of Minimum Rentals | Minimum rent revenues related to operating leases are as follows:
Total future minimum rents associated with operating leases are as follows as of September 30, 2023:
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Segments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Segment Operating Results | Segment operating results are as follows:
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Summary of Assets by Segment and the Reconciliation of Total Segment Assets to the Total Assets in the Condensed Consolidated Balance Sheets | The assets by segment and the reconciliation of total segment assets to Total assets in the Condensed Consolidated Balance Sheets are summarized as follows:
(a)During the third quarter of 2023, the Company recorded a $709.5 million impairment charge related to the Seaport segment. Refer to Note 4 - Impairment for additional information.
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Presentation of Financial Statements and Significant Accounting Policies (Narrative) (Details) $ in Millions |
1 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Jun. 30, 2022 |
Sep. 30, 2023
USD ($)
|
Dec. 31, 2022
USD ($)
|
Oct. 05, 2023 |
Aug. 11, 2023 |
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Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Commons conversion ratio | 1 | ||||
Amortized cost basis of financing receivables | $ 658.5 | $ 545.4 | |||
Accrued interest on financing receivables | $ 51.4 | $ 36.4 | |||
Financing receivable threshold period past due | 30 days | ||||
Seaport Entertainment | Subsequent Event | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Percentage of air rights | 80.00% | ||||
Teravalis Acquisition | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Percentage of minimum required capital contribution | 9.24% | 12.00% | 12.00% |
Presentation of Financial Statements and Significant Accounting Policies (Accounts Receivable, Net) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 108,875 | $ 103,437 |
Reserve for uncollectible amounts | 11,400 | 8,900 |
Reserve for uncollectible amounts under ASC 842 | 7,400 | 3,400 |
Reserve for uncollectible amounts under ASC 450 | 5,500 | |
Collectibility of Receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Reserve for uncollectible amounts under ASC 450 | 4,000 | |
Straight-line rent receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | 89,712 | 84,145 |
Tenant receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | 5,382 | 12,044 |
Other receivables | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, net | $ 13,781 | $ 7,248 |
Presentation of Financial Statements and Significant Accounting Policies (Impacts of the ASC 842 and ASC 450 Reserves) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Total (income) expense impact | $ 2,553 | $ 381 | $ 4,644 | $ (1,524) |
Collectibility of Receivables | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
ASC 842 reserve, rental revenue | 1,107 | 275 | 5,644 | (3,762) |
ASC 450 reserve, provision for (recovery of) doubtful accounts | $ 1,446 | $ 106 | $ (1,000) | $ 2,238 |
Impairment (Summary of Impairments) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Real Estate [Line Items] | ||||
Impairment of real estate | $ 672,492 | $ 0 | $ 672,492 | $ 0 |
Total Impairment | $ 0 | $ 0 | ||
Seaport Segment | ||||
Real Estate [Line Items] | ||||
Impairment of real estate | 672,492 | 672,492 | ||
Investments in unconsolidated ventures | 37,001 | 37,001 | ||
Total Impairment | 709,493 | 709,493 | ||
Seaport Segment | Buildings and equipment | ||||
Real Estate [Line Items] | ||||
Impairment of real estate | 450,944 | 450,944 | ||
Seaport Segment | Land | ||||
Real Estate [Line Items] | ||||
Impairment of real estate | 11,106 | 11,106 | ||
Seaport Segment | Developments | ||||
Real Estate [Line Items] | ||||
Impairment of real estate | $ 210,442 | $ 210,442 |
Other Assets and Liabilities (Other Assets, Net) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Other Assets and Liabilities [Line Items] | ||
Security, escrow, and other deposits | $ 81,751 | $ 48,578 |
Special Improvement District receivable, net | 59,433 | 64,091 |
Prepaid expenses | 27,237 | 18,806 |
Interest rate derivative assets | 22,886 | 30,860 |
Intangibles, net | 22,713 | 25,170 |
Tenant incentives and other receivables, net | 9,447 | 8,252 |
Other | 7,945 | 12,555 |
TIF receivable, net | 3,001 | 1,893 |
Net investment in lease receivable | 2,885 | 2,895 |
Notes receivable, net | 1,883 | 3,339 |
Condominium inventory | 670 | 22,452 |
Other assets, net | 276,385 | 278,587 |
In-place leases, net | ||
Other Assets and Liabilities [Line Items] | ||
In-place leases, net | $ 36,534 | $ 39,696 |
Other Assets and Liabilities (Accounts Payable and Other Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
OTHER ASSETS AND LIABILITIES [Abstract] | ||
Condominium deposit liabilities | $ 472,169 | $ 390,253 |
Construction payables | 256,833 | 260,257 |
Deferred income | 82,472 | 85,006 |
Accrued real estate taxes | 44,443 | 37,835 |
Tenant and other deposits | 38,560 | 26,100 |
Accrued interest | 29,631 | 49,156 |
Accounts payable and accrued expenses | 28,147 | 36,174 |
Other | 27,500 | 28,856 |
Accrued payroll and other employee liabilities | 24,113 | 30,874 |
Accounts payable and other liabilities | $ 1,003,868 | $ 944,511 |
Mortgages, Notes and Loans Payable, Net (Summary of Mortgages, Notes and Loans Payable) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Unamortized deferred financing costs | $ (51,534) | $ (55,005) |
Mortgages, notes, and loans payable, net | 5,196,000 | 4,747,183 |
Senior Notes | ||
Debt Instrument [Line Items] | ||
Fixed-rate debt | 2,050,000 | 2,050,000 |
Mortgages | ||
Debt Instrument [Line Items] | ||
Fixed-rate debt | 1,492,580 | 1,500,841 |
Variable-rate debt | 1,174,574 | 916,570 |
Bonds | ||
Debt Instrument [Line Items] | ||
Fixed-rate debt | 55,380 | 59,777 |
Secured Debt | ||
Debt Instrument [Line Items] | ||
Variable-rate debt | $ 475,000 | $ 275,000 |
Mortgages, Notes and Loans Payable, Net (Schedule of Senior Unsecured Note) (Details) - Senior Notes - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Principal | $ 2,050,000 | $ 2,100,000 | $ 2,100,000 |
Unsecured Senior Notes Due 2028 | |||
Debt Instrument [Line Items] | |||
Principal | $ 750,000 | ||
Interest Rate | 5.375% | ||
Unsecured Senior Notes Due 2029 | |||
Debt Instrument [Line Items] | |||
Principal | $ 650,000 | ||
Interest Rate | 4.125% | ||
Unsecured Senior Notes Due 2031 | |||
Debt Instrument [Line Items] | |||
Principal | $ 650,000 | ||
Interest Rate | 4.375% |
Fair Value (Assets Measured on a Recurring Basis) (Details) - Interest Rate Swap - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative assets | $ 22,886 | $ 30,860 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative assets | 0 | 0 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative assets | 22,886 | 30,860 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate derivative assets | $ 0 | $ 0 |
Fair Value (Assets and Liabilities Not Measured at Fair Value) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Assets: | ||||
Cash and Restricted cash | $ 935,798 | $ 1,098,937 | $ 926,308 | $ 1,216,637 |
Liabilities: | ||||
Allowance for accounts receivable | 11,400 | 8,900 | ||
Level 1 | Carrying Amount | ||||
Assets: | ||||
Cash and Restricted cash | 935,798 | 1,098,937 | ||
Level 1 | Estimated Fair Value | ||||
Assets: | ||||
Cash and Restricted cash | 935,798 | 1,098,937 | ||
Level 3 | Carrying Amount | ||||
Assets: | ||||
Accounts receivable, net | 108,875 | 103,437 | ||
Notes receivable, net | 1,883 | 3,339 | ||
Level 3 | Estimated Fair Value | ||||
Assets: | ||||
Accounts receivable, net | 108,875 | 103,437 | ||
Notes receivable, net | 1,883 | 3,339 | ||
Level 2 | Carrying Amount | ||||
Liabilities: | ||||
Fixed-rate debt | 3,597,960 | 3,610,618 | ||
Variable-rate debt | 1,649,574 | 1,191,570 | ||
Level 2 | Estimated Fair Value | ||||
Liabilities: | ||||
Fixed-rate debt | 3,033,514 | 3,298,859 | ||
Variable-rate debt | $ 1,649,574 | $ 1,191,570 |
Derivative Instruments and Hedging Activities (Narrative) (Details) $ in Millions |
9 Months Ended | 12 Months Ended |
---|---|---|
Sep. 30, 2023
USD ($)
derivative
|
Dec. 31, 2022
derivative
|
|
Derivative [Line Items] | ||
Interest rate swap agreements settled | derivative | 0 | 0 |
Interest Rate Swap | Derivative instruments designated as hedging instruments: | ||
Derivative [Line Items] | ||
Gain on derivative expected amount to be reclassified | $ 6.4 | |
Credit Risk Contract | ||
Derivative [Line Items] | ||
Derivative liability fair value gross | $ 0.0 |
Derivative Instruments and Hedging Activities (Impact of Financial Instruments on Statement of Operations) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Interest expense | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Reclassified from AOCI into Statements of Operations | $ 5,602 | $ (728) | $ 11,819 | $ (6,709) |
Interest Rate Swap | ||||
Effect of the Company's derivative financial instruments on the income statement | ||||
Amount of Gain (Loss) Recognized in AOCI on Derivatives | $ 5,420 | $ 6,794 | $ 9,055 | $ 24,355 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ (144,701) | $ 33,858 | $ (161,349) | $ 41,822 |
Income (loss) before income taxes | $ (688,688) | $ 141,527 | $ (747,104) | $ 173,094 |
Effective tax rate | 21.00% | 23.90% | 21.60% | 24.20% |
Accumulated Other Comprehensive Income (Loss) (Summary of Changes in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
Derivative instruments: | |||||||
Balance at the beginning of the period | $ 3,568,453 | $ 3,443,801 | $ 3,606,112 | $ 3,710,670 | |||
Other comprehensive income (loss) before reclassifications | 5,420 | 6,794 | 9,055 | 24,355 | |||
(Gain) loss reclassified from accumulated other comprehensive income (loss) to net income | (5,602) | 728 | (11,819) | 6,709 | |||
Reclassification of the Company's share of previously deferred derivative gains to net income | [1] | 0 | 0 | 0 | (6,723) | ||
Net current-period other comprehensive Income (loss) | (182) | 7,522 | (2,764) | 24,341 | |||
Balance at the end of the period | 3,029,651 | 3,550,891 | 3,029,651 | 3,550,891 | |||
Equity in earnings (losses) from unconsolidated ventures | (30,886) | 7,708 | (41,874) | 19,528 | |||
Share of investee's other comprehensive income, tax expense (benefit) | $ 1,900 | 1,912 | |||||
Disposal Group, Disposed of by Sale, Not Discontinued Operations | 110 North Wacker | |||||||
Derivative instruments: | |||||||
AOCI, reclassification of cash flow hedge | 6,700 | ||||||
Equity in earnings (losses) from unconsolidated ventures | $ 8,600 | ||||||
AOCI Attributable to Parent | |||||||
Derivative instruments: | |||||||
Balance at the beginning of the period | 7,753 | 2,362 | 10,335 | (14,457) | |||
Balance at the end of the period | $ 7,571 | $ 9,884 | $ 7,571 | $ 9,884 | |||
|
Common Stock and Equity (Details) |
Aug. 11, 2023 |
---|---|
Equity [Abstract] | |
Commons conversion ratio | 1 |
Revenues (Schedule of Contract with Customer, Assets and Liabilities) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Contract Liabilities | ||
Beginning balance | $ 457,831 | $ 431,177 |
Consideration earned during the period | (115,302) | (558,462) |
Consideration received during the period | 201,571 | 693,535 |
Ending balance | $ 544,100 | $ 566,250 |
Leases (Narrative) (Details) |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Lessee, Lease, Description [Line Items] | |
Lessee, remaining lease term | 2 years |
Lessor, average remaining lease term | 4 years |
One Lease | |
Lessee, Lease, Description [Line Items] | |
Lessee, remaining lease term | 50 years |
Leases (Leased Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Operating lease right-of-use assets | $ 45,596 | $ 46,926 |
Operating lease obligations | $ 51,761 | $ 51,321 |
Leases (Lease Costs) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||||
Operating lease cost | $ 1,707 | $ 1,680 | $ 5,124 | $ 5,747 |
Variable lease costs | 258 | 158 | 849 | 801 |
Total lease cost | $ 1,965 | $ 1,838 | $ 5,973 | $ 6,548 |
Leases (Lease Liability Maturity) (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
Remainder of 2023 | $ 1,482 | |
2024 | 5,057 | |
2025 | 3,668 | |
2026 | 3,368 | |
2027 | 3,360 | |
Thereafter | 243,770 | |
Total lease payments | 260,705 | |
Less: imputed interest | (208,944) | |
Present value of lease liabilities | $ 51,761 | $ 51,321 |
Leases (Other Information) (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows on operating leases | $ 3,452 | $ 4,324 |
Weighted-average remaining lease term (years) | ||
Operating leases | 43 years 10 months 24 days | 43 years 8 months 12 days |
Weighted-average discount rate | ||
Operating leases | 7.80% | 7.70% |
Leases (Minimum Rent Payments Received) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Leases [Abstract] | ||||
Total minimum rent payments | $ 59,673 | $ 57,246 | $ 175,752 | $ 171,839 |
Remainder of 2023 | 62,777 | 62,777 | ||
2024 | 254,321 | 254,321 | ||
2025 | 240,708 | 240,708 | ||
2026 | 222,768 | 222,768 | ||
2027 | 209,812 | 209,812 | ||
Thereafter | 988,238 | 988,238 | ||
Total | $ 1,978,624 | $ 1,978,624 |
Segments (Narrative) (Details) a in Thousands, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
a
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
a
segment
location
|
Sep. 30, 2022
USD ($)
|
|
Segments reporting | ||||
Number of reportable segments | segment | 4 | |||
Impairment charges, including equity method investment | $ 0 | $ 0 | ||
Seaport Segment | ||||
Segments reporting | ||||
Impairment charges, including equity method investment | $ 709,493 | $ 709,493 | ||
Seaport Segment | ||||
Segments reporting | ||||
Area of real estate property (in sqft) | a | 472 | 472 | ||
Number of primary locations | location | 3 |
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